UK Law and Practice Contributed by: Ben Morgan, Ali Sallaway, Matthew Bruce and Emily Knight, Freshfields
• set impact tolerances for maximum tolerable disruption; and • continually review response and recovery plans. There are also strict requirements that apply to many firms that outsource critical functions, including agreeing contractual frameworks with Critical Third Parties (CTP), and preparing busi- ness continuity plans in the case of disruption and exit plans where necessary to remove a CTP to ensure an adequate crisis response. The requirement for mandatory contractual arrange- ments with CTPs has had a knock-on effect for the communications and technology sectors, which have been required to implement the measures indirectly via pressure from financial institutions to agree to the new conditions. The FCA is also consulting on proposals for new inci- dent and third-party reporting and contractual requirements for firms. There may also be greater regulation of other entities outside the traditional financial services sector by the FCA. The regulator has recently announced plans to address operational resil- ience and systemic risk issues of crypto-assets by bringing these types of financial arrange- ments into its regulatory perimeter. This means that operational resilience requirements will apply directly to further companies. A crisis arising from the supply of dangerous products will likely engage companies that man- ufacture, supply and offer any affected products. Many of the regulations in this area arise from EU law and post-Brexit measures, and the newly formed Office for Product Safety and Standards (OPSS) has started to develop policies and introduce new laws governing how companies supply and offer products safely. Steps taken by the OPSS include the publication of its Incident
Management Plan, which addresses identifying and managing product safety risks and learn- ing lessons from incidents. This guidance has continued to be updated since publication, with last year’s updates covering how incidents ought to be escalated and guidance on command and control arrangements. The OPSS is also work- ing closely with the Competition and Markets Authority (CMA) to overhaul consumer safety laws, with the product safety regulations cur- rently passing through parliament set to prompt dramatic changes to the product safety land- scape. As noted above, several regulators and govern- ment departments have also issued soft guid- ance. 1.3 Post-Crisis M&A A crisis (including geo-political uncertainty) can present opportunities for M&A activity, such as where businesses suffer temporary share price reduction, or where fluctuations in currency exchanges make international businesses good value. For example, following the global financial crisis, there was a wholesale restructuring of the ownership of UK banks arising from the merging of some of the most distressed banks into the most established players. Similarly, the UK retail sector underwent a significant restructuring dur- ing and following the COVID-19 pandemic as weaker high-street retailers were acquired by opportunistic competitors looking to profit from the crisis. There can also be consequences for transac- tions at the time of a disruption. Issues related to purchasers exiting the transaction during a cri- sis can raise complex issues around the extent to which a purchaser is obliged to complete a transaction when the seller and/or the acquired asset is subject to a crisis situation and/or there
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