We support the intention behind the Financial Conduct Authority, Prudential Regulation Authority and Bank of England’s proposals on operational incident and third-party reporting and welcome the regulators’ efforts to strengthen cross-industry resilience and improve their oversight of potential operational and third-party risks through more structured, consistent and effective reporting requirements.
However, the current draft of the proposals is too ambiguous and overly complicated. We are concerned that this would result in the overreporting of low-level incidents, an unnecessary level of intermediate reports and initial triaging and duplicative reporting requirements. This would place a disproportionate burden on firms. The current proposals also risk creating duplication with existing requirements, and in certain instances the purpose or value of some of the proposed reporting is unclear. The regulatory reporting burden has already increased considerably in recent years, creating significant operating friction for UK firms and we strongly encourage that the focus of additional requirements should be on reporting that is genuinely useful for supervision.
Overall, we believe the proposals as currently drafted fall short of meeting the regulators’ secondary objective for international competitiveness and growth. We ask that the regulators consider our feedback and refine their proposals to ensure proportionate, aligned and effective final rules that are fit to enable and enhance the future competitiveness of the UK financial sector.
We look forward to receiving clarity on concerns we have raised and, in due course, the final rules from the regulators.
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