What's Happening?
British financial regulators, including the Bank of England, have signed an agreement with their European counterparts to improve cooperation and oversight of tech providers critical to the financial services sector. This memorandum of understanding aims
to enhance cross-border oversight of cloud service providers and other tech firms, reducing risks from cyberattacks and web outages. The European Union has designated 19 tech firms as critical, including Amazon Web Services, Google Cloud, and Microsoft Azure. The agreement coincides with a visit to Brussels by UK financial services minister Lucy Rigby, who is meeting with European Commissioner for Financial Services Maria Luis Albuquerque to discuss closer EU-UK cooperation on financial services. Despite financial services not being part of a 2025 UK-EU reset deal, discussions will focus on areas beneficial to both economies.
Why It's Important?
The agreement between UK and EU regulators is significant as it addresses the growing reliance on tech providers in the financial sector, which poses risks such as cyberattacks and service disruptions. By enhancing oversight, the agreement aims to ensure that these tech firms have robust risk management and governance frameworks, thereby safeguarding the financial sector's stability. This cooperation is crucial as it reflects ongoing efforts to maintain financial stability post-Brexit, despite the absence of financial services in the UK-EU reset deal. The move could lead to more resilient financial services infrastructure, benefiting both UK and EU economies.
What's Next?
The UK plans to bring tech firms within its regulatory regime later this year, which will further align with the EU's approach. This could lead to more comprehensive oversight and potentially more agreements between the UK and EU on financial services. Stakeholders in the financial sector, including tech firms, will need to prepare for increased regulatory scrutiny and ensure compliance with new standards. The ongoing discussions between UK and EU officials may also pave the way for future collaborations in other areas of mutual interest.
