EBA revised its guidelines on outsourcing arrangements for financial institutions, including credit institutions and investment firms subject to the Capital Requirements Directive (CRD) as well as payment and electronic money institutions. The guidelines cover information technology outsourcing, including fintech and outsourcing to cloud service providers. The guidelines will enter into force on September 30, 2019.
The guidelines set out specific provisions for the governance frameworks of all financial institutions within the scope of the EBA mandate with regard to their outsourcing arrangements and related supervisory expectations and processes. They clarify that the management body of each financial institution remains responsible for that institution and its activities at all times. Outsourcing must not lead to a situation in which an institution becomes an "empty shell" that lacks the substance to remain authorized. Additionally, the guidelines specify which arrangements with third parties are to be considered as outsourcing. The guidelines differentiate between requirements on critical and important outsourcing arrangements and other outsourcing arrangements. Outsourcing of critical and important functions has a higher impact on the institutions' and payment institutions' risk profile. Hence, the requirements for such functions are stricter compared to the requirements for other less risky outsourcing arrangements.
The guidelines aim to established a harmonized framework aimed to ensure that institutions can apply a single framework on outsourcing for all their banking, investment, and payment activities and services. Such a framework also ensures a level playing field between different types of financial institutions. These guidelines replace the 2006 guidelines on outsourcing while the recommendation on outsourcing to cloud service providers, which was published in December 2017, has been integrated into these guidelines.
Effective Date: September 30, 2019
Keywords: Europe, EU, Banking, Fintech, Outsourcing Arrangements, Cloud Outsourcing, Proportionality, EBA
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published a report that examines the use of certain exemptions included in the large exposures regime under the Capital Requirements Regulation (CRR).
The Bank of England (BoE) issued a communication to firms to provide an update on the progress of the joint data transformation program—which is being led by BoE, the Financial Conduct Authority (FCA), and the industry—for the financial sector in UK.
The European Banking Authority (EBA) published the draft methodology, templates, and template guidance for the European Union-wide stress test in 2023.
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly published the final guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms.
The Prudential Regulatory Authority (PRA) proposed expectations, via CP8/22, in respect of changes to the instruments or claims that comprise unvested deferred sums awarded to material risk-takers as part of their variable pay.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.7.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The Office of the Superintendent of Financial Institutions (OSFI) updated the 2023 Basel Capital Adequacy Reporting (BCAR) manual as well as the 2023 BCAR return.
In a letter to the G20 Leaders, ahead of the July 2022 meeting, the Financial Stability Board (FSB) Chair set out an overview of the key work done by FSB.
The Single Resolution Board (SRB) published its resolvability assessment and "heat map" for 2021, updated the operational guidance on implementation of bail-in tool, and issued the annual report for 2021.