PRA and FCA Policy Statement – Operational Resilience: Impact tolerances for businesses

PRA and FCA Policy Statement – Operational Resilience: Impact tolerances for businesses

Background

• On 29 March 2021, the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA), and the Bank of England (‘the Bank’) jointly published a detailed set of documents on the subject of “Operational Resilience: Impact tolerances for important business services”
• https://www.bankofengland.co.uk/prudential-regulation/publication/2018/building-the-uk-financial-sectors-operational-resilience-discussion-paper
• This Policy Statement (PS) is relevant to UK banks; building societies; PRA-designated investment firms (banks); UK Solvency II firms; the Society of Lloyd’s and its managing agents (insurers).
• This paper is issued jointly by the PRA, FCA and Bank in their capacity of supervising financial market infrastructures (FMIs) as ‘the supervisory authorities’
• A key priority for the supervisory authorities is to put in place a stronger regulatory framework to promote the operational resilience of firms and FMIs
• To this end, the supervisory authorities have previously published a joint Discussion Paper on Operational Resilience in 2018 setting out an approach to operational resilience (DP1/18) and a suite of consultation documents (‘the consultations’) (CP29/19) in December 2019 to embed this approach into policy

Impacts

This Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 29/19 Operational resilience: Impact tolerances for important business services and also contains the PRA’s final policy, as follows:

• a new Operational Resilience Parts of the PRA Rulebook (Appendix 1);
• amendments to the Group Supervision Part of the PRA Rulebook (Appendix 1);
• a new Supervisory Statement (SS) 1/21 ‘Operational resilience: Impact tolerances for important business services’ (Appendix 2); and
• a new Statement of Policy (SoP) ‘Operational resilience’ (Appendix 3).

The proposals set out in this PS have been designed in the context of the UK having left the European Union and the transition period having come to an end. Unless otherwise stated, any references to EU or EU derived legislation refer to the version of that legislation which forms part of retained EU law.

The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework.

Timeline with relevant dates to be logged on regulatory calendar

• Operational Resilience rules and SS1/21 will be effective from 31 March 2022

Next steps

To comply with the rules, firms should contact their supervisors to agree their plans for meeting policy requirements.

If anyone has specific questions or needs any advice, contact our specialists.