The Financial Stability Board (FSB) has published an overview of the responses it received to its November 2020 discussion paper on regulatory and supervisory issues relating to outsourcing and third-party relationships. The note summarises the main issues raised and views expressed in the public consultation.
The FSB received 39 responses from a wide range of stakeholders including banks, insurers, asset managers, financial market infrastructures and third-party service providers. Respondents generally welcomed the discussion paper and agreed with the challenges and issues it identified.
Respondents suggested the following measures to address challenges and issues relating to outsourcing and third-party relationships:
- The development of global standards (which could include both regulatory and industry standards) on outsourcing and third-party risk management;
- The adoption of consistent definitions for terms such as “outsourcing” and “third-party relationships”;
- The use of pooled audits as an effective form of third-party risk management;
- The use of certificates and reports provided by third-party service providers evidencing compliance with internationally-recognised standards as a way to promote a consistent approach to financial institutions’ oversight of third-parties;
- The establishment by financial institutions of an inventory of services and technologies provided by third parties to map their dependency on third parties, and enhance supervisory authorities’ oversight of third-party service providers;
- The creation of a regular international forum (or public-private global working group) to exchange views and best practices on cross-border issues associated with outsourcing and third-party relationships.