The UK's financial watchdog has issued a stark warning, stating the country needs to significantly strengthen its regulatory grip on major foreign technology firms that provide critical services to the banking sector.
Growing Threat of Tech Outages
Sarah Pritchard, the Financial Conduct Authority's (FCA) first deputy chief executive, emphasised that there have been very frequent reminders of the vital importance of robust operational resilience and cybersecurity controls for banks.
She stressed that this is an area requiring constant vigilance due to the severe consequences of failure. Her comments follow a significant incident last month where a glitch at Amazon's cloud computing services in North Virginia disrupted online services for more than 2,000 companies.
This outage affected major UK institutions including Lloyds Banking Group and the London Stock Exchange, sparking renewed concerns over the financial sector's heavy reliance on a small number of foreign tech giants for essential internet-based operations.
Regulatory Powers Remain Unused
Despite these clear vulnerabilities, the UK government has faced criticism for failing to designate any company, such as Amazon or Google, as a critical third party to the financial services sector.
This designation, a power granted to the Bank of England and the FCA at the start of 2025, would subject these tech firms to direct financial regulatory oversight. When questioned on the lack of designations nearly a year after the powers were introduced, Pritchard stated, We would like to see the system strengthen.
She confirmed that the FCA stands ready to jointly supervise with the Prudential Regulation Authority (PRA) and the Bank of England once a designation is finally made.
The Consequences of Inaction
The proposed oversight regime is designed to compel critical tech providers to report major incidents and engage in coordinated emergency planning, aiming to prevent widespread banking blackouts.
This need is underscored by alarming data from the Treasury select committee, which revealed that customers of Britain's major banks and building societies endured the equivalent of more than a month's worth of IT failures over the last two years.
While Pritchard acknowledged that the financial services industry has strengthened its framework, she issued a clear final warning: No one should rest on our laurels.
