Getting financial institutions ready for the EBA Outsourcing guidelines

The European Banking Authority has published new Guidelines on Outsourcing arrangements applicable to banks, investment firms and payment institutions. The new guidelines acknowledge and address the growing use and changing face of outsourcing arrangements in the increasingly technology-driven financial sector. They target the key risks associated with these changes by harmonising and strengthening the regulatory framework and the requirements for financial institutions. The Guidelines shall enter into force on 30 June 2019.

What will change with the new guidelines?

  • Outsourcing policy: Financial institutions shall have a documented outsourcing policy that defines the main phases of the lifecycle of outsourcing arrangements
  • Assessment of the criticality or importance of the outsourcing: Additional criteria on existing assessments, such as, considering the ‘substitutability’ of the outsourced arrangement
  • Due diligence of the intended outsourced provider: Documented due diligence before entering into an outsourcing arrangement, newly considering human rights, environmental protection and working conditions 
  • Content of the Outsourcing agreement: Minimal requirements and mandatory contractual clauses
  • Risk assessment: Assess and monitor the potential impact of the outsourcing arrangements on operational risk (data protection, concentration risks, step-in risk, sub-outsourcing risks...)
  • Governance and oversight of outsourcing arrangements: Monitor the service providers’ performance on an ongoing basis. Stronger role of internal audit as an effective Third Line of Defence
  • Intra-group outsourcing: Must be subject to the same regulatory framework and oversight as outsourcing to the service providers outside the group
  • Exit strategies: Requirement to define an exit strategy for all outsourcing of critical or important functions

The EBA outsourcing guidelines redefine the lifecycle of outsourcing relationship
The EBA outsourcing guidelines redefine the lifecycle of outsourcing relationship

How can PwC help your organisation bring its outsourcing practices to the next level

We have developed a standardized approach with proven methodologies to assess the current state of outsourcing in your organisation and to define the steps which need to be taken towards the desired state of compliance, while minimising impact on day-to-day operations.

PwC’s approach

Step 1 - Mobilize

Project mobilisation

  • Identify stakeholders and project participants
  • Organise kick off
  • Set up governance


Stakeholders' training

  • Introduce the EBA Outsourcing guidelines to the project participants
  • Get a first overview of the organization’s readiness state
  • Agree on the key steps of the project

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Step 2 - Assess

Gap analysis

  • Map the current situation
  • Identify the work that needs to be done to achieve the desired state of compliance

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Step 3 - Plan

Roadmap

  • Develop a roadmap with risk-based prioritisation
  • Agree on timeline and resources

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Step 4 - Roll-out

Implementation @ your organisation

  • Implement the agreed changes in your organisation 


Implementation @ your service providers

  • Update the outsourcing arrangements with your service providers
  • Verify the suitability of your service providers against the new requirements

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PwC as your one-stop shop advisor

As a multi-disciplinary practice, we are uniquely placed to help you adjust to the new EBA Outsourcing guidelines. Our regulatory team includes management consultants, business and process analysts, lawyers, risk specialists and IT specialists to cover the diverse situations in which your organisation uses outsourcing arrangements and support you in bringing those arrangements up to the new standard of compliance. 

PwC as your one-stop shop advisor

Contacts

Mike Jennings

Partner, Consulting, PwC Czech Republic

Tel: +420 251 152 024

Vincent Santamaria

Consulting, PwC Czech Republic

Tel: +420 733 612 785

Radek Buršík

Partner, PwC Legal

Tel: +420 251 152 509

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