FSB consults on outsourcing issues

2020/11/09

The Financial Stability Board (FSB) launched a consultation (to run until 8 January 2021) on its discussion paper (DP) on regulatory and supervisory issues relating to outsourcing and third-party relationships, which draws on findings from a survey conducted among the FSB members and identifies several challenges. For instance, financial institutions must ensure that their contractual agreements with third parties grant to them, as well as to supervisory and resolution authorities, rights to access, audit and obtain information from third parties, even in a multi-jurisdictional context. The management of sub-contractors and supply chains is another challenge that was identified. The possibility of systemic risk arising from concentration in the provision of some outsourced and third-party services to financial institutions is also raised. These risks may become higher as the number of financial institutions receiving critical services from a given third party increases. Given the cross-border nature of this dependency, supervisory authorities and third parties could particularly benefit from enhanced dialogue on this issue.