The Draft Guidelines, which review the existing CEBS Guidelines on Outsourcing published in (CEBS Guidelines), are the EBA’s. on outsourcing. by PLC Financial Services. Related Content. CEBS: Guidelines on outsourcing. by PLC Financial Services. Related Content. They review the existing Committee of European Banking Supervisors (CEBS) guidelines on outsourcing, which were published in
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In addition, the Financial Institution should ensure that the service provider appropriately oversees the sub service providers in line with the policy defined by the Financial Institution. The Cloud Recommendations, published on 20 Decemberbecame effective as of 1 July According to the EBA, Financial Institutions also need to consider the risks associated ooutsourcing receiving services from third parties, even when these arrangements are not considered to be outsourcing arrangements.
This is a large number of responses which demonstrates the importance of these guidelines to the financial services sector and the desire to influence the future direction of travel. Among other things, the draft Guidelines specify certain conditions that must be met before a Financial Institution outsources banking activities or payment services outsourcinng require authorisation or registration by a competent authority outsoircing the Member State where the Financial Institution is authorised.
The Cloud Recommendations were published cebbs of the full revision of the CEBS Guidelines, due to demand for timely guidance in this area. Specific guidance is provided on the relationship between institutions, payment gjidelines and ceb providers, including on their rights and obligations. Institutions and payment institutions should ensure that the service provider grants them and their competent authorities complete access to all relevant business premises access rights and unrestricted rights of inspection and auditing related to the outsourcing arrangement audit rights.
Here you can read the Guidelines. Outsourcing arrangements with third country service providers must be subject to additional safeguards that ensure that they do not unduly increase risks or impair the ability of competent authorities to effectively supervise Financial Institutions. Financial Institutions must identify, manage, monitor and report all risk they are or might be exposed to in relation to arrangements with third parties. Institutions and payment institutions should have sound outsourcng governance arrangements which include a clear organisational structure.
Next Steps The Public Outsourccing consisted of industry bodies, bank representatives, law firms, service providers and industry utilities in deep discussion and questioning the EBA for two hours. The Public Consultation consisted of industry bodies, bank representatives, law firms, service providers and industry utilities in deep discussion and questioning the EBA for two hours.
Yvonne Dunn Partner View profile. Notwithstanding, it seems unlikely that the EBA will make any concessions in the final guidelines for FinTech providers. December 17, WebPage Regulatory News.
Also notably, this FCA announcement was most likely a political nod to European regulators that UK financial services firms are expected to remain compliant with the leading European guidance on outsourcing to the cloud. At the Public Consultation, the EBA confirmed that intra-group arrangements should be subject to the same degree of rigour and risk assessment as third-party arrangements, but noted that this scope was not new and was already a requirement pursuant to Article of Capital Requirements Directive CRD IV.
The Guidelines specify that sub-outsourcing requires ex ante notification to the institutions and payment institutions in case of outsourcing of critical or important functions. The EBA opened a consultation on proposed new outsourcing guidelines back in June. September 24, Keywords: Are you looking for someone or something in particular? December 18, WebPage Regulatory News. The revised guidelines deal with the responsibilities of the management body for the establishment of an appropriate framework for outsourcing, its implementation and application in a group, the due diligence process, and risk assessment before entering such arrangements.
The draft Guidelines are considerably more prescriptive than the CEBS Guidelines, including regarding their scope; the outsourcing policy; the outsourcing contract; other documentation requirements; risk assessments; outsourcing of critical and important functions; outsourcing to third countries; intra-group outsourcing; and sub-outsourcing.
As well as having a broader scope of application, the draft Guidelines are considerably more prescriptive than the CEBS Guidelines meaning that inscope Financial Institutions will need to review and update their outsourcing arrangements once the draft Guidelines are adopted.
The draft Guidelines seek to establish a more harmonised framework for all financial institutions supervised by the EBA. This requires In-Scope Entities to balance the drive to be innovative and market-leading which appears to be encouraged by the EBA in the FinTech Roadmap with the need to implement robust contractual arrangements and operational processes to manage risk as required by the Draft Guidelines.
The aim of these Guidelines is to harmonise the framework for outsourcing arrangements of all financial institutions in the scope of the EBA’s action. That consultation closed in September.
In particular, each Financial Institution should ensure that the selection of a group entity is based on guidelknes reasons, the conditions of the outsourcing arrangement are set at arms length and that they explicitly deal with any conflicts of interests that the outsourcing arrangement may entail.
CEBS: Guidelines on outsourcing
The guidelines clarify aspects related to the contractual arrangements, the monitoring and documentation of outsourcing arrangements, and the supervision by competent authorities. The Recommendation on outsourcing guicelines cloud service providers, published in Decemberhas also been integrated into the Guidelines.
Interestingly the Draft Guidelines do not address the fact that integrating guidelines means that payment institutions and electronic money institutions will, from the effective date of the Draft Guidelines, outslurcing subject to the cloud considerations even though such institutions are not currently in scope of the Cloud Recommendations Addressees.
Putsourcing, In-Scope Entities will need to consult only one set of guidelines for outsourcing both cloud and non-cloud. The Guidelines provide criteria to ensure a more harmonised assessment of the criticality or importance of functions.
It is fair to say that the EBA now has a considerable amount of homework. Looking for news over 5 years old? Skip to content [Accesskey ‘1’] Skip to navigation [Accesskey ‘2’]. In addition, when outsourcing to third country service providers, a Financial Institution should be satisfied that the service provider acts in a socially responsible manner and adheres to international standards on human rights, environmental protection and appropriate working conditions, including the prohibition of child labour.
According to the draft Guidelines, they will apply to outsourcing arrangements entered into on or after 30 June this is an indicative date.
EBA Consults on Guidelines on Outsourcing in the EU
Many attendees at the Public Consultation noted that this scope was unduly onerous and would become administratively burdensome for firms to manage. These recommendations, addressed to credit institutions, investment firms, and competent authorities Cloud Recommendations Addresseesexamine the key considerations for a relevant institution that outsources services to a cloud environment.
The consultation runs until September 24, OCC issued a proposed rule on the company-run stress testing requirements for national banks and Federal savings associations. According to the draft Guidelines, each Financial Institution should maintain a register of its outsourcing arrangements which documents and records all current outsourcing arrangements and which includes certain specified information regarding: This briefing is for general guidance only and should not be regarded as a substitute for professional advice.
The draft guidelines provide a clear definition of outsourcing and specify the criteria to assess whether or not an outsourced activity, service, process, or function or part of it is critical or important.