The FCA Operational Resilience Guidelines & What They Mean

Financial service regulators in the United Kingdom (UK) are always looking for new ways to increase operational resilience in their sector. The main financial authorities in the United Kingdom are the Bank of England, the Financial Conduct Authority (FCA), and the Prudential Regulation Authority (PRA). Their responsibilities consist of maintaining and improving operational resilience in the financial services sector of the United Kingdom. A lack of financial resilience, financial security, or financial confidence can ruin an economy very quickly. All three institutions look to avoid storms and be able to weather them when they do arrive. 


Recently, the FCA updated its guidelines on operational resilience. The FCA Operational Resilience guidelines affect around 60,000 organizations within the UK. Most of these organizations consist of investment firms, banks, payment processing vendors, currency exchanges, asset management, and much more. We will take a look at the major changes and how they will affect financial institutions in the UK.   


Guideline Changes

Each regulator has specific duties and supervisions within the world of operational resilience as it pertains to financial institutions. The FCA focus is on factors that help protect consumers and the financial sector safely as technological threats and advancements are made. The discussion of changes being made to the guidelines started way back in 2018 and is now finally being rolled out in the form of new policy statements. The policy statements will instruct firms on what needs to be achieved in terms of information security, not how they should be achieved. Within these policy statements, the FCA is requesting firms affected to conduct threshold audits to determine how ready financial institutions are when a crisis occurs. 


What Does The FCA Want To See?  

The FCA is looking for financial institutions to invest in the ability to maintain servicing their businesses and consumers throughout any economic and societal downturns such as a pandemic or major crash. The FCA would like to see steps on both the micro and macro levels. For financial institutions, this shouldn’t come as a shock due to most major organizations practicing risk management. The FCA is more saying “hey, don’t forget about that.” The FCA is looking for financial institutions to show that they have business continuity plans and resilient business processes in place so they can continue efficient operation. 


On top of this, the FCA is looking at how financial institutions communicate with vendors, consumers, and other businesses. The FCA is worried about the lack of transparency and information available to certain entities which can cause panic and unrest. In the policy statements, the FCA details what financial institutions should be conscious of when doing these assessments of their current risk management practices. Check it out at www.fca.org.uk.


I hope this helps!


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