Why is the UK regulating MSPs now?

For years, MSPs operated without mandatory cybersecurity standards-even though they held privileged access to networks, backups, identities and sensitive data. That changed after a series of high-impact incidents showed that MSP compromise is now a national-level risk.

Two events accelerated the government’s decision:

• 2024 Ministry of Defence payroll breach - attackers accessed military personnel data via an MSP.

• Synnovis ransomware attack - caused 11,000+ cancelled NHS appointments and a £32.7m impact.

The government’s own economic modelling shows that a major cyberattack on national infrastructure could add £30bn to UK borrowing. MSP supply-chain risk is no longer hypothetical.

As a result, MSPs are now classified as critical connective digital infrastructure, bringing them under formal ICO regulation for the first time.

Which MSPs will fall under the new rules?

Around 1214 UK MSPs are expected to be in scope. This includes providers offering:

• IT management

• Helpdesk services

• Cybersecurity services

• Cloud, identity or data-access management

If you manage or secure client environments, you are almost certainly included.

This creates a sharp divide: MSPs who can prove compliance and resilience and those who cannot.

What does the Cyber Security and Resilience Bill require from MSPs?

The Bill introduces three core obligations that change how MSPs will operate.

1. Mandatory incident reporting within 24 hours

MSPs must notify regulators and the NCSC of any harmful cyber incident within 24 hours, with a complete report by 72 hours. This removes the option to “quietly fix” breaches. Transparency becomes mandatory.

For MSPs without documentation, playbooks, escalation paths or 24/7 monitoring, this will be one of the hardest requirements to meet.

2. Minimum cybersecurity standards

While the final standards are still under consultation, they’re expected to map closely to:

• Cyber Essentials Plus

• ISO 27001

MSPs must be able to demonstrate:

• Documented security and access policies

• Regular vulnerability management

• Staff training

• Baseline technical controls (MFA, EDR, logging, immutable backups, etc)

In other words: if you can’t prove it, it doesn’t count.

3. ICO audits, enforcement and fines

MSPs will sit under the ICO-just like any regulated digital service provider.

That includes:

• Scheduled and unscheduled audits

• Improvement notices

• Financial penalties for failure to meet obligations

For many MSPs, this is the first time operations, documentation and security controls will be legally examined.

Why cyber insurance will accelerate the market shift

The Bill indirectly triggers a second major change: skyrocketing demand for cyber insurance.

Only 45% of UK businesses currently carry cyber insurance and just 7% have standalone cover. Regulated MSPs will now need policies for themselves and must meet insurer controls to remain insurable.

This flips the script. MSPs will become a core dependency for their clients' insurance eligibility.

Insurers increasingly demand:

• MFA everywhere

• EDR on all endpoints

• Immutable backups

• Logging and correlation

• Documented incident response

MSPs who meet the Bill’s standards can help clients meet theirs-making them indispensable risk partners.

Why most MSPs will struggle - and what will set leaders apart

The Bill does not excuse smaller MSPs or provide transition exceptions. Providers without:

• Security documentation

• Measurable operational controls

• Audit-ready reporting

• 24/7 monitoring and incident visibility

…will find compliance extremely difficult.

This leads to the core opportunity in the market.

Three strategic advantages for MSPs who prepare early:

1. Client acquisition from non-compliant competitors

As enforcement begins, many MSPs will raise prices, reduce scope or exit the market. Their clients will need regulated alternatives that can demonstrate compliance.

2. Premium-pricing justification

A regulated MSP can clearly articulate:

“You’re not paying for tools. You’re paying for a secure, audited, government-recognised operational standard.”

This creates natural separation from low-cost competitors.

3. Compliance-aligned security services

While MSPs are not compliance consultants, they can deliver the operational security outcomes and reporting that clients need to meet regulatory or insurance requirements.

This is where enhanced.io becomes a strategic multiplier.

How enhanced.io helps MSPs demonstrate compliance without becoming compliance advisors

Many MSPs fear compliance conversations because they don't want to provide regulated advice, and enhanced.io solves this by giving MSPs a transparent, audit-ready record of their security operations - removing guesswork and proving due diligence.

✔ Evidence-based reporting for regulatory audits

Every detection, response action, alert, enrichment and investigative step is automatically logged inside Stellar Cyber’s Open XDR platform, with time-stamped activity trails.

This allows MSPs to show:

• What they detected

• When they detected it

• How they responded

• The outcomes achieved

This aligns perfectly with the Bill’s requirement for operational transparency.

✔ Audit-ready incident timelines for 24-hour reporting

When MSPs must submit incident details, enhanced.io gives them:

• A complete incident timeline

• Correlated alerts

• Impacted assets

• Response steps already taken

This reduces reporting friction and shortens the time to deliver regulator-ready documentation.

✔ Compliance-friendly reporting for MSP clients

Clients will ask:
 "How do I know you’re compliant if you’re managing our infrastructure?"

enhanced.io helps MSPs answer this confidently through:

• Monthly security posture summaries

• Threat detection and response proof

• Vulnerability and exposure reporting

• User and identity behaviour analytics

• Mapped evidence for insurers and auditors

This gives clients exactly what they need to prove resilience without the MSP offering compliance consulting.

✔ A shared system of record for insurers and auditors

Insurers increasingly demand:

• Evidence of EDR

• Identity protection

• Continuous monitoring

• Documented response steps

• Vulnerability management

enhanced.io provides a single, unified record for all of this - enabling MSPs and their clients to demonstrate readiness and reduce premiums.

What does the future look like for MSPs who lead early vs. those who wait?

Regulation will only tighten from here, and the providers who treat compliance as a one-off project will always be chasing the next requirement.

But MSPs who build compliance into their operational DNA will:

• Attract higher-value clients

• Justify higher prices

• Differentiate on measurable security outcomes

• Meet cyber-insurance controls effortlessly

• Expand into compliance advisory revenue

The UK channel is about to split into two categories:

1. The MSPs trying to keep up.

Constantly firefighting. Constantly explaining gaps. Constantly defending price.

2. The MSPs shaping the new standard.

Audit-ready. Insurance-ready. Compliance-ready. And winning the clients who care about resilience-not the lowest hourly rate.

Which group will you be in?

The Cyber Security and Resilience Bill isn’t a distant future requirement. It marks a structural shift in how MSPs will operate, sell, deliver services and compete.

Early movers will define the new benchmark-and win the largest market realignment the MSP sector has seen in decades.