The Financial Stability Board (FSB) is consulting on “Regulatory and Supervisory Issues Relating to Outsourcing and Third-Party Relationships” following a survey conducted among the FSB members.
Whilst financial institutions have relied on outsourcing relationships for decades, the extent and nature of such interactions has evolved particularly in the area of technology. The Covid-19 pandemic may have accelerated this trend towards greater reliance on certain third-party technologies.
The FSB’s discussion paper identifies a number of issues. For example, financial institutions have to ensure that their contractual agreements with third parties grant to them (as well as to supervisory authorities) appropriate rights to access, audit and obtain information from third parties. It can be challenging to negotiate and exercise these rights, particularly in a multi-jurisdictional context. The management of sub-contractors and supply chains is another challenge that was highlighted by the financial institutions’ response to the pandemic.
The consultation closes on 8 January 2021.