The PRA has published updates to its policy and a revised supervisory statement on ensuring operational continuity in resolution (PS 9/21 and SS4/21) following its consultation paper in October. 2: Feedback to responses 2.1. The UK Prudential Regulation Authority (PRA) has published a consultation paper on operational continuity for larger retail and investment banks.It follows on from a 2014 discussion paper on the . Banks are working furiously to meet this regulatory deadline. The PRA's new rules and guidance on operational resilience will come into force on 31 March 2022 and its rules on OCIR will come into force on 1 . SYSC 4.1.1 R requires a firm to have effective processes to identify, manage, monitor and report risks and internal control mechanisms. The PRA proposes that these changes . The series of coordinated consultation papers on operational resilience, published by the UK supervisory authorities in December 2019, provide the strongest . This follows on from their joint Discussion Paper published in July 2018 and resulting consultation papers (CPs . 1. The Financial Conduct Authority (FCA) in the UK defines operational resilience as "the ability of firms and financial market infrastructures, and the financial sector as a whole, to prevent, adapt, respond to, recover and learn from operational disruptions.". The Operational Continuity Instrument 2016 sets out the final text of the new Operational Continuity Part of the PRA Rulebook and will come into effect on January 1, 2019. On October 6, 2014, the Prudential Regulation Authority ("PRA") published a discussion paper on ensuring operational continuity in resolution in banks, building societies and investment firms regulated by the PRA. Part 2 addresses the regulatory framework on operational resilience in the EU, and includes a table summarising the key UK and EU rules and guidelines relating to operational resilience. PRA published a new waiver by consent to waive the Continuity of Access requirements contained in the Depositor Protection Part of the PRA Rulebook (DPP). 2.2. On 25 November 2021, the PRA published Consultation Paper 21/21: Operational Resilience and Operational Continuity in Resolution: CRR firms, Solvency II firms, and Financial Holding Companies (for Operational Resilience) (CP21/21).In CP21/21 the PRA sets out proposals to apply the group provisions in the Operational Resilience Part of the PRA Rulebook relevant to Capital Requirements . Developments continue at the domestic and international level. 24 February 2020 17:54 Insights paper: EU Financial Services Guidance for IT Outsourcing Regulation and Managing Third-Party Risk. Other UK standards: PS7/21 and SS2/21 are designed to 'complement the requirements and expectations on operational resilience' in the PRA Rulebook, SS1/21 'Operational resilience: Impact tolerances for important business services' and the Statement of Policy 'Operational resilience'.The latter were published on the same day as the materials on outsourcing and form 'a helpful lens . The . 1 Introduction; 2 Operational arrangements for critical services; 3 Facilitating recovery and resolution; 4 Scope of Outsourcing; The PRA states that it has amended certain aspects of its proposed policy, the main ones applicable to insurers being as follows: To provide greater clarity for firms, the PRA has decided to amend the definition of important group business services in Rule 1.2 of the Operational Resilience rules applicable to Solvency II firms. Disruption could be caused by a variety of different factors including, for example, a cyber . 1 January 2019 is the critical date in the UK regulatory calendar: that is when the UK Prudential Regulatory Authority's (PRA) operational continuity requirements come into effect. Operational Resilience vs. Outsourcing to Third-Party Providers. Except in relation to those functions described in SYSC 8.1.5R and (for a common platform firm in article 30(2) of the MiFID Org Regulation)7, where a firm relies on a third party for the performance of operational functions which are not critical or important . 21.2 An operational continuity firmmust submit to the PRAannually (on a calendar year basis), within 45 business daysafter the end of the calendar year, the completed data itemPRA109. operational Continuity in Resolution and resolvability. Following the publication of the PRA's final rules and Supervisory Statement on "Ensuring operational continuity in resolution", Berwin Leighton Paisner LLP's Usman Wahid has produced a short note on key operational and contractual areas for firms covered by the rules ("regulated firms") to consider. However, these third-party arrangements are still subject to the PRA Fundamental Rules and other PRA requirements and expectations on business continuity, governance, operational resilience, and risk management. UK Financial Services Law, PRA - Prudential Regulation Authority, Consultations, 2021 Consultations Banks/Credit Institutions, Capital Requirements, Capital Requirements Legislation - CRD IV/V, CRR/CRR2, Insurance & Reinsurance, Insurance and Reinsurance Directive - Solvency II, Mutual Societies, Operational resilience, Recovery and Resolution, Solvency II 3. 2.3 A firm's operational and financial arrangements must ensure the continuity of the critical servicesit receives in the event of: (1) circumstances in which all or part of the business of any other member of itsgroupis likely to fail; or (2) the failure of all or part of the business of any other member of itsgroup. continuity of services to end users. However, they say that if the internal services are part of the "chain" of activities which underpin an Download At a glance - Updates to Operational continuity in resolution Contact us Rakesh Majithia Partner, PwC United Kingdom Tel: +44 (0) 7803 023856 Email Duncan Scott The final rules (documented within two Policy Statements) demonstrate the Regulators' reluctance to make major changes to its draft rules based on a large volume of responses. The PRA states that it may issue a subsequent consultation paper with draft rules in 2015. Handbook and PRA Rules and new PRA Supervisory Statement). The PRA has made a consequential amendment to Operational Continuity 1.1 to ensure that the change in the definition does not change which firms are in scope of the rules. On 29 March 2021, the Bank of England, FCA and PRA jointly issued a paper explaining their policy on strengthening operational resilience in the financial sector. According to the PRA's operational resilience policy, firms should be operationally resilient irrespective of how they utilize outsourcing and third-party services. Regulators publish rules on operational resilience for finance sector. PRA 2017/21 Annex B Amendments to the Operational Continuity Part In this Annex, new text is underlined and deleted text is struck through. a part of the requirement of firms to manage risks prudentially and, if necessary, hold capital buffers. 28/06/2018. Banks, insurers and investment firms should seek clarification from the UK's Prudential Regulation Authority (PRA) over their obligations around data when engaging outsourcing providers. Mr Mackinnon notes that firms' processes for existing requirements, such as their disaster recovery and business continuity testing, could be used as part of the implementation of operational . PRA is proposing other minor formatting and clarification amendments to the Operational Resilience (Appendix 1) and Operational Continuity Parts of the PRA Rulebook (Appendix 3), along with the consequential amendments to the supervisory statement SS1/21 on operational resilience (Appendix 2). Although the findings suggest that many firms have taken meaningful steps to build operational resilience into their systems and processes, the FCA also . The end of March saw a flurry of activity on operational resilience as the UK regulators published final policy on operational resilience and, for the UK Prudential Regulation Authority (PRA), final rules on outsourcing and third party risk management while the Basel Committee on Banking Supervision (BCBS) issued its new Principles for Operational Resilience and revised Principles for the . The proposals would amend the Operational Continuity Part of the PRA Rulebook and PRA OCIR expectations, and would lead to a new Supervisory Statement on OCIR. Operational resilience is the ability of firms, financial market infrastructures and the financial sector as a whole to prevent, adapt and respond to, recover and learn from operational disruption. This series is split in three parts: Part 1 includes an overview of the most recent operational resilience regulatory developments in the UK. The FCA and PRA have proposed new rules for inclusion in the FCA Handbook and the PRA Rulebook. 11.03.2022. Financial institutions should expect their outsourcing and third-party risk management practices to come under increased scrutiny as part of the growing regulatory focus on the operational resilience of the financial services sector. Download this At a glance to see our summary of the updates to the PRA's operational continuity in resolution regime. The Bank of England (BoE) and the Prudential Regulation Authority (PRA) are consulting in parallel on a package of proposals relating to their policies for operational continuity in resolution (OCIR). The proposals would make amendments to the Operational Continuity Part of the PRA Rulebook (Rules) (see Appendix 1) and PRA OCIR expectations, and would result in a new Supervisory Statement (SS) on OCIR (Appendix 2). The PRA has published Policy Statement 10/17: Ensuring operational continuity in resolution - reporting requirements (PS10/17).. We also agree with the PRA's analysis that the proposed changes to the Operational Continuity part of the Rule book are minor, clarificatory and will . On 25 November 2021, the PRA published Consultation Paper 21/21: Operational Resilience and Operational Continuity in Resolution: CRR firms, Solvency II firms, and Financial Holding Companies (for Operational Resilience) (CP21/21).. For a long time, operational continuity remained a relatively unknown term outside of the hallowed . This chiefly introduces the requirement, which must be complied with "within a reasonable time" and by no later than 30 June 2022, for certain operational resilience group obligations to be applied to CRR consolidation entities. The regulator is holding a consultation until 3 April on proposed new guidance on outsourcing and third party risk management. The PRA's consultation paper "Operational resilience: Impact tolerances for important business services" (CP29/19) CP29/19 proposes to implement (i) amendments to the PRA Rules which will introduce a regulatory framework in relation to operational resilience; and (ii) a Statement of Policy (SoP) setting out the PRA's approach to the . In light of the final OCIR policy of PRA, BoE also clarified the following: Clear roles and responsibilities should be assigned for business continuity and exit plans . On 25 November 2021, the PRA published Consultation Paper 21/21: Operational Resilience and Operational Continuity in Resolution: CRR firms, Solvency II firms, and Financial Holding Companies (for Operational Resilience) (CP21/21).In CP21/21 the PRA sets out proposals to apply the group provisions in the Operational Resilience Part of the PRA Rulebook relevant to Capital Requirements . application thresholds set out in 1.1 of the Operational Continuity Part of the PRA Rulebook.2 1.3 The operational continuity policy support s the resilience and resolvability of firms including by seeking to ensure that group providers of critical services supporting suc h The PRA expects resilience to be embedded in the way firms do business and for it to become a major consideration in their investment programmes. Table of Contents + Expand all headings Expand side bar > SS9/16 - Ensuring operational continuity in resolution. The wider context The UK's rules are a piece of the operational resilience jigsaw. The current waiver by consent (and individual waivers) for the Continuity of Access rules expires on December 01, 2019. Amendments to the Operational Continuity Part In this Annex deleted text is struck through. on a standalone basis; the PRA is giving priority to those services which are outward facing. Deposit-takers should consider whether they meet one of the three . Following the Prudential Regulation Authority's (PRA) publication last week of a series of four Consultation Papers concerning Bank Resolution and Operational Continuity in Resolution (OCIR), some of the more interesting takeaways covered the Regulator's perspectives on how resolution and operational resilience will interact. We use necessary cookies to make our site work (for example, to manage your session). Operational resilience is defined by the UK supervisory authorities as 'the ability of firms and Financial Market Infrastructures and the financial sector as a whole to prevent, adapt, respond to, recover and learn from operational disruptions.'. The proposals would make amendments to the Operational Continuity Part of the PRA Rulebook (see Appendix 1) and PRA OCIR expectations, and would result in a new Supervisory Statement on OCIR (Appendix 2). questions surrounding operational continuity, the PRA recently published a Discussion Paper (DP 1/14) on the topic and initiated a three month consultation. a revised version of the PRA supervisory statement, Operational resilience: Impact tolerances for important business services ; and; PRA Rulebook: CRR Firms: Operational Continuity Instrument 2022 . Simply said, operational resilience is the ability of organisations to adapt . 2 FACILITATION OF EFFECTIVE RECOVERY AND RESOLUTION PLANNING 2.3 A firm's operational and financial arrangements must ensure the continuity of the critical servicesit receives in the event of: The term 'essential services' will not be introduced. . PRA has inserted a new rule into Chapter 8 of the Operational Resilience Part of the PRA Rulebook and extended the timeline to implement the requirements for CRR consolidation entities from March 31, 2022 to June 30, 2022.