The European Banking Authority (EBA) has launched a public consultation to define new guidelines for banks which outsource key operations.
The new guidelines aims to amend the existing CEBS Guidelines on outsourcing which was published in 2006 to implement a more harmonised framework o carry out outsourcing arrangements.
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It defines outsourcing and provides certain criteria to determine the importance of an outsourced activity or service.
Additionally, the revised Guidelines include credit institutions and investment firms subject to the Capital Requirements Directive (CRD), payment institutions subject to the revised Payment Services Directive (PSD2) as well as electronic money institutions subject to the e-money Directive.
The consultation period will run till 24 September this year.
In the recent years, various financial services providers outsourced activities to reduce operating costs and to improve efficiency.
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By GlobalDataThe proposed guidelines clarify the particular responsibilities of the lender and fintech companies to establish a proper framework for outsourcing and its implementation.
It also requires the respective management to carry out due diligence process and risk assessment before finalising outsourcing arrangements.
Furthermore, it details about the contractual arrangements, documentation and supervision of the outsourcing arrangements.
The proposed rules clearly states that a company’s management body cannot be outsourced as well as it can never outsource all its activities undermining its existence and authority to function.
