The UK’s Financial Conduct Authority (FCA) has issued a stern warning to financial institutions following the widespread disruption caused by CrowdStrike’s software failure in July 2024. The regulator highlighted the increasing reliance on unregulated third-party service providers and the potential risks they pose to the financial system.
The FCA emphasized the importance of operational resilience and urged firms to learn from the CrowdStrike incident. This includes implementing robust business continuity plans, identifying single points of failure, and strengthening update and testing procedures.
The regulator also stressed the need for clear communication strategies to inform customers and stakeholders during such disruptions. The FCA highlighted that some institutions, which had already complied with its PS21/3 regulations, were better prepared to handle the situation.
The CrowdStrike incident serves as a stark reminder of the potential consequences of third-party service failures. The incident has also sparked discussions about the risks associated with over-reliance on a single vendor, the importance of rigorous testing procedures, and the need for robust incident response plans. As the financial industry continues to evolve, it is crucial for institutions to remain vigilant and adapt to emerging threats.