Outsourcing Agreement Bank

The aim of these guidelines is to enable financial institutions to strengthen their alignment with a set of rules for all outsourcing agreements (including cloud outsourcing), whether for third parties or within the group. The guidelines replace the old outsourcing rules published in 2006 by the European Committee of Banking Supervisors (which applied only to credit institutions) and incorporate the EBA`s cloud outsourcing guidelines from July 2018. Although these guidelines are not incorporated into UK legislation, the ACF said it expected companies to continue to implement them as they remain relevant after Brexit. Finally, financial institutions are expected to inform the relevant authorities of significant changes and/or significant events regarding their outsourcing agreements, which could have a significant impact on the further activity of the financial institution. The guidelines require financial institutions to conduct a comprehensive risk analysis before entering into an outsourcing agreement that takes into account the many risk factors, including operational risks, associated with the outsourced function. The guidelines contain a comprehensive list of additional risks to consider. Thus, the financial institution is asked to carefully check whether the service provider is appropriate. To outsource critical and important functions, due diligence should check whether the provider has the company`s reputation, appropriate and sufficient skills, expertise, capacity, resources (. B for example, man, IT, finance), organizational structure and, if necessary, regulatory authorizations or registrations necessary to perform the critical or important function during the duration of the cooperation in a reliable and professional manner. These guidelines define MAS`s expectations of a financial institution that has entered into an outsourcing agreement or is considering outsourcing its operations to a service provider. The guidelines include options that institutions and service providers may wish to consider before a regulatory deadline set by the EBA.