The UK government designated Microsoft, Alphabet, Amazon, and Oracle as Critical Third Parties on Friday to strengthen the country's financial systems. The Bank of England, the Prudential Regulation Authority, and the Financial Conduct Authority will jointly oversee the critical services the four companies provide to the financial sector. The designation was established under the UK's Financial Services and Markets Act 2023 to reduce the risk of widespread disruption if a major cloud provider experiences operational issues. The framework addresses growing concerns that disruptions at major cloud providers could affect multiple financial institutions simultaneously. The UK financial sector accounts for about 28% of all cyberattacks in the country according to a CloudGuard Financial Services Threat Report published earlier this year.
At the time of writing, MSFT stock was up 0.4%, ORCL shares climbed 1%, while GOOG and AMZN shares edged 0.2% lower each.
Bank of England, PRA, and FCA to Oversee Cloud Services for Financial Sector
The firms covered under the new framework are Microsoft Ireland Operations, Google Cloud EMEA, Amazon Web Services EMEA, and Oracle Corporation UK. The Bank of England, the Prudential Regulation Authority, and the Financial Conduct Authority will jointly oversee the critical services the four companies provide to the financial sector. Regulatory oversight will apply only to the financial sector, not to their broader business operations.
The designated companies will be required to maintain strong systems to identify, manage, and recover from disruptions affecting services used by financial institutions. Regulators will be allowed to gather information, assess operational resilience, and enforce certain rules if needed to ensure the continuity of critical services.
Rachel Blake, Economic Secretary to the Treasury of the United Kingdom, stated that these designations will help ensure the critical services financial firms rely on remain resilient, protecting consumers and businesses while supporting growth across the economy.
Financial Services and Markets Act 2023 Establishes Critical Third Parties Framework
The Critical Third Parties designation was established under the UK's Financial Services and Markets Act 2023 to improve operational resilience. The framework builds on the Bank of England's 2021 assessment that the financial sector's increasing reliance on a small number of cloud providers warranted stronger regulatory oversight to safeguard essential financial services relied upon by millions of consumers and businesses.
UK Financial Sector Accounts for 28% of National Cyberattacks
According to a CloudGuard Financial Services Threat Report published earlier this year, cyber risks faced by the UK's financial sector have reached a record high, with the industry accounting for about 28% of all cyberattacks in the country. The report highlighted growing threats from ransomware, nation-state hackers, and AI-powered scams such as deepfakes and targeted phishing. It also warned of a sharp rise in credential theft, with billions of stolen login credentials circulating on the dark web.
FAQ
What did the UK government designate Microsoft, Alphabet, Amazon, and Oracle as on Friday?
The UK government designated Microsoft, Alphabet, Amazon, and Oracle as Critical Third Parties on Friday under the Financial Services and Markets Act 2023 to strengthen the country's financial systems.
Why did the UK establish the Critical Third Parties designation?
The Critical Third Parties designation was established under the UK's Financial Services and Markets Act 2023 to improve operational resilience after growing concerns that disruptions at major cloud providers could affect multiple financial institutions simultaneously.
What percentage of cyberattacks in the UK target the financial sector?
According to a CloudGuard Financial Services Threat Report published earlier this year, the UK financial sector accounts for about 28% of all cyberattacks in the country.
