The Prudential Regulation Authority (PRA), responsible for regulating UK banks, credit unions, and insurers, plans to increase its scrutiny of major cloud computing providers
FREMONT CA: The Prudential Regulation Authority (PRA), which regulates UK banks, credit unions, and insurers, intends to tighten its oversight of key cloud computing companies. Concerns originate from the banking sector's increased reliance on the Big Three to manage its systems, as well as the risk of a system outage or hack. As a result, according to the Financial Times, the PRA is looking at ways to gain access to additional data from Amazon, Microsoft, and Google, particularly in regard to the operation resilience of their services. Amazon Web Services has partnered with Barclays and HSBC in recent years. Microsoft Azure and Google Cloud, meanwhile, have partnered with Lloyds Banking Group.
The PRA is mandated to achieve three goals: to ensure that these firms are safe and sound; and contribute to the provision of adequate protection for policyholders (for insurers). To make it easier for businesses to compete effectively. It contributes significantly to the Bank's core mission of safeguarding and enhancing the stability of the UK financial system. Firms must also meet statutory requirements known as Threshold Conditions. Firms must maintain adequate capital and liquidity, as well as have competent management.
While the PRA regulates UK banks' use of cloud computing, there are rising concerns about the degree of disruption that many services fail at the same time could cause. According to sources close to the PRA, the regulatory body proposes more rigorous testing of outage and recovery performance, albeit consumer data protection remains the PRA's priority.
The dangers of over-dependence on the financial sector were highlighted in December of last year, when an outage at Amazon Web Services brought big service providers like Netflix and Disney to a halt. Such a failure has drawn the attention of regulators worldwide, and greater regulation of cloud services is expected to be a major subject in 2022. A joint discussion paper on the issues caused by cloud computing will be published later this year by the Bank of England, the Financial Conduct Authority, and the Prudential Regulation Authority.