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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That said, the potential systemic risk implications of the use of cloud arrangements is an area of focus for banking regulators and should be monitored going forward.
EBA consults on Guidelines on outsourcing
According to the EBA, competent authorities must grant authorisation in full compliance with EU Law and cbes set a strict framework in line with the draft Guidelines for outsourcing from Financial Institutions to third country entities and ensure consistent and effective supervision.
The guidelines also stipulate that institutions must ensure audit and access rights in written outsourcing agreements both for themselves and for competent authorities and institutions are required to maintain a register of all outsourcing arrangements. It is fair to say that the EBA now has a considerable amount of homework.
According to the draft Guidelines, each Financial Guieelines should maintain a register of its outsourcing arrangements which documents and records all current outsourcing arrangements and which includes certain specified information regarding: The outsourcing agreement should specify ouhsourcing or not the service provider can sub-contract the provision of a critical or important function.
CEBS: Guidelines on outsourcing
The Guidelines specify the criteria to assess whether an outsourced activity, service, process or function or part of it is critical or important. The Draft Guidelines aim to integrate the Guodelines Recommendations, and the Guidflines Recommendations will be repealed when the final outsourcing guidelines take effect.
The European Banking Authority will issue final guidelines early next year on what banks and other financial institutions should have in place when outsourcing some of their functions to third parties, including cloud providers.
Notwithstanding, it seems unlikely that the EBA will make any concessions in the final guidelines for FinTech providers. The draft Guidelines specify certain minimum requirements that must be included in all guidrlines contracts, as well as a number of additional requirements that apply when outsourcing critical or important functions.
We remain hopeful that the EBA will address these key issues when it comes to finalise the guidelines in the first quarter of ,” she said. September 24, Keywords: The attendees at the Public Consultation raised a number of questions which have, no doubt, given the EBA considerable food for thought.
December 19, WebPage Regulatory News. EBA to issue final outsourcing guidelines in early The European Banking Authority outsorcing issue final guidelines early next year on what banks and other financial institutions should have in place when outsourcing some of their functions to third parties, including cloud providers. Responding to these concerns Bernd Rummel of the EBA noted that the competent authorities would be in regular dialogue with In-scope Entities and would not exercise such a right without consultation.
Also, institutions and payments institutions are required to maintain a register of all outsourcing arrangements. This approach was challenged at the Public Consultation on the grounds it could lead to operational risk, in particular in connection with cloud outsourcing arrangements. If a competent authority considers concentration risk to be too great, then it may order the cessation of such an arrangement. Inthe EBA has also promised to issue guidelines and a report or opinion on IT management and security.
The EBA has said that it will issue a follow-up report or opinion on “the implementation” of its cloud outsourcing recommendations. Notably, the broadening of the addressees of the Draft Guidelines In-scope Entitiesto include payment institutions subject to the revised Payment Services Directive PSD2 and electronic money institutions subject to the e-money Directivewas not discussed in detail at the Public Consultation.
As many In-scope Entities set about moving key operations out of the UK and to other EU member states, intra-group outsourcing arrangements will become increasingly critical. As a result, both cloud and FinTech featured heavily on the agenda at the Public Consultation. The draft Guidelines set out a number of requirements as to how risk is to be assessed.
Paul Hermant Partner Belgium. Trystan Tether Partner UK.
European Banking Authority’s Draft Guidelines on Outsourcing: Discussion of Key Themes
Here you can read the Guidelines. Weekly Newsletter Receive personalised Out-Law content in your inbox. 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 draft Guidelines stipulate that the outsourcing policy should consider the main phases of the life cycle of outsourcing arrangements and define the principles, responsibilities and processes in relation to outsourcing.
They also provide a harmonised set of criteria for assessing criticality or importance. Institutions and payment institutions should ensure that service providers, where relevant, comply with. Click here to start your search. Financial Institutions must identify, manage, monitor and report all risk they are or might be exposed to in relation to arrangements with third parties.
Pauline Kuipers Partner Netherlands. Are you looking for someone or something in particular? The Draft Guidelines state that intra-group arrangements, as well as third-party outsourcings, must comply with the Draft Guidelines.
The Cloud Recommendations were published ahead of the full revision of the CEBS Guidelines, due to demand for timely guidance in this area. Going forward, it will be interesting to see how the FCA responds to the introduction of the outsourcing guidelines and, as a result, repeal of the Cloud Iutsourcing which are scheduled to come into effect after the UK has left the EU.