EBA欧洲银行-BSG-response-to-EBA-Draft-Guidelines-on-outsourcing-28EBA-CP-2018-1129_24-Sep-2018_6页_542kb

Summary of Comments by the EBA Banking Stakeholder Group on EBA/CP/2018/11 - Draft Guidelines on Outsourcing Arrangements

Core Content

The EBA Banking Stakeholder Group has provided detailed comments on the EBA Draft Guidelines on Outsourcing Arrangements, focusing on the scope, definitions, obligations, and transitional arrangements for outsourcing in the banking sector. The comments emphasize the need for a more nuanced and proportionate approach to the regulation of outsourcing, particularly in the context of intragroup arrangements and the definition of "outsourcing."

Main Views and Key Information

1. Definition of Outsourcing

• The EBA Banking Stakeholder Group believes that the definition of outsourcing in the draft guidelines is too broad and needs clarification.

• They argue that the phrase "not normally performed by the institutions" should be interpreted based on whether the activity is related to core banking functions that require a license.

• Several specific processes/services/activities are suggested to be excluded from the scope of outsourcing, including:

  • External consultancy for advice on operations fully managed by the institution.
  • Temporary hiring of external project staff.
  • Staff training.
  • Purchasing market data or market research.
  • Standard ICT assets license agreements, software development agreements, and supply of hardware/software platforms.
  • Public facilities (electricity, water, gas, telephone, broadband) and ad-hoc operational assistance.
  • Payroll accounting.
  • Infrastructure tenant services (electricity, cooling, connections).
  • Purchase of computers.

• They also suggest that services which are typically provided by specialized third parties (e.g., utilities, security services) should not be considered as outsourcing.

2. Intragroup Outsourcing

• The Group highlights that intragroup outsourcing arrangements are generally less risky due to the higher level of control within the group.
• They recommend that intragroup outsourcing should be subject to lower obligations compared to extra-group outsourcing.
• They believe that the proposed requirements on documentation, due diligence, concentration risk, and exit strategy are less relevant or even irrelevant for intragroup arrangements.

3. Notification and Information Requirements

• The Group suggests that prior approval by the National Competent Authority (NCA) is not necessary for outsourcing arrangements.
• They argue that the proposed information requirements do not add significant value and could be misinterpreted as an authorization process.
• Instead, they propose that institutions should be allowed to inform the NCAs ex-post (after the arrangement is in place), rather than ex-ante.
• A repository of outsourcing arrangements should be sufficient, and only critical or important functions should be subject to detailed documentation.

4. Table of Requirements

• The Group recommends the creation of a specific table or diagram to clearly distinguish the requirements for general outsourcing, critical/important outsourcing, and intragroup arrangements.
• This would help institutions and supervisors understand which rules apply to which type of outsourcing.

5. Register

• The introduction of a register for all outsourcing arrangements is a new development.
• However, the Group suggests that the register should only include arrangements related to critical or important functions, given the lower risk and administrative burden of non-critical/non-important functions.
• For non-critical/non-important functions, documentation should be limited to:
  • A brief description of the function outsourced.
  • The name of the service provider.

6. Scope of Application and Transitional Period

• The Group recommends that the guidelines should be limited to critical/important outsourcing arrangements.
• They argue that extending the contractual requirements to non-critical/non-important functions is disproportionate.
• Regarding the transitional period, they suggest that the current proposed end date (31 December 2020) is too rigid and propose a more flexible timeframe.
• They also recommend that the transitional period should apply only to critical or important functions, while non-critical/non-important arrangements can be aligned with the guidelines upon contract renewal.

7. Exit Strategies

• The Group supports the development of comprehensive exit strategies for outsourcing of important and critical functions.
• They propose rewording paragraph 90a of the Draft GLs to clarify that exit plans should address key considerations such as potential costs, impact, resource and timing implications, and be sufficiently documented.

Conclusion

The EBA Banking Stakeholder Group advocates for a more differentiated and proportionate approach to outsourcing regulation, emphasizing the importance of clarity in definitions, the need for tailored requirements for intragroup and critical/important outsourcing, and the reduction of unnecessary administrative burdens. They also stress the importance of aligning the guidelines with existing regulatory frameworks and ensuring that the transitional period is appropriately structured.