June 22, 2018

EBA is issued a consultation on the draft guidelines on outsourcing in the EU. 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. The consultation runs until September 24, 2018.

The guidelines clarify aspects related to the contractual arrangements, the monitoring and documentation of outsourcing arrangements, and the supervision by competent authorities. 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 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. 

The revised guidelines cover credit institutions and investment firms subject to the Capital Requirements Directive (CRD), but also payment institutions subject to the revised Payment Services Directive (PSD2) and electronic money institutions subject to the e-money Directive. They establish a more harmonized framework for outsourcing arrangements of all financial institutions in the scope of EBA action. They review the existing Committee of European Banking Supervisors (CEBS) guidelines on outsourcing, which were published in 2006. Outsourcing is relevant in the context of gaining or maintaining access to the EU financial market. In particular, third country institutions may set up subsidiaries or branches in EU to get or maintain access to EU financial markets and infrastructure. 

 

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Comment Due Date: September 24, 2018

Keywords: Europe, EU, Banking, Outsourcing, Guidelines, PSD 2, CRD, EBA

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