Regulators publish guidance on the identification of key financial workers and critical outsource partners
26 March 2020
The BoE and FCA have published guidance for firms to help them identify key financial workers. Visit BoE’s guidance and FCA’s guidance to find out more. Key financial workers will be able to send their children to school during the period they are closed due to COVID-19. A key financial worker is one who fulfils a role which is necessary for the firm to continue to provide essential daily financial services to consumers, or to ensure the continued functioning of markets.
The regulators have also asked firms to identify any critical outsource partners who are essential to continued provision of services, including those which are not financial services firms.
What does this mean?
The regulators are of the view that firms are best placed to identify key financial workers within their organisations. There will be a limited number of key financial workers. These may include Senior Manager Function holders under the SM&CR and individuals vital for the provision of customer services and critical services such as payments, lending and access to cash. The regulators recommend that firms’ CEOs oversee the process of identifying key financial workers.
What should firms do?
As a starting point firms should identify ‘the activities, services or operations which, if interrupted, are likely to lead to the disruption of essential services to the real economy or financial stability. Many firms will already have a view of these services through work on recovery and resolution planning (RRP). Alternatively, those firms not in scope for RRP may have a view from their work to identify their important business services, and the resources necessary to deliver them, in the context of the regulators’ consultation papers (CPs) on operational resilience (summarised here: UK supervisory authorities reveal more on how firms should build their operational resilience). Once these services have been identified, firms should assess which individuals and critical outsource providers are necessary to deliver them. Regulatory scrutiny of outsourcing and third party providers has been increasing in recent years, including with the publication of a PRA CP on the topic (summarised here: PRA proposes outsourcing and third party risk management rules).
Firms should also assess whether they should issue a letter to all key workers identifying them as such. The regulators recommend that the letter includes the sentence "the individual has been designated as a key worker in relation to their employment by firm name” and is signed by someone with appropriate authority.