UK financial regulators to be given powers over Big Tech cloud providers

The world’s regulatory bodies have beome increasingly concerned about the reliance of banks on a small number of Big Tech cloud providers.

The Bank of England’s Financial Policy Committee in 2021 criticised the opaque nature of cloud contracts and concluded “the increasing reliance on a small number of cloud service providers and other critical third parties could increase financial stability risks without greater direct regulatory oversight of the resilience of the services they provide.”

According to HM Treasury, over 65% of UK firms used the same four cloud providers in 2020, raising concerns about widespread disruption to critical financial services in the event of a power outage.

The new ‘critical third party regime’, will give Britain’s financial watchdogs the power to extend their oversight of individual firm risk arrangements with cloud providers to ” manage potential systemic risks stemming from concentration in the simultaneous provision of material services to multiple firms”.

In practice, the regulator will be able to: