The EBA Outsourcing Arrangements Navigator allows financial institutions to assess the extent to which the EBA Outsourcing Guidelines apply to them and require them to adjust their internal operations, update their outsourcing policy and manage their register of outsourcing arrangements. This tool includes a questionnaire which helps financial institutions to assess whether (1) an arrangement is an outsourcing under the outsourcing regulations (and whether it is a “critical” or “important” outsourcing) and (2) whether an arrangement is a critical service (e.g. it supports a “critical function”) under the regulations on operational continuity, which also apply to the financial institution. Depending on the outcome of the questionnaire, the user will be guided to certain actions that should be taken in order to satisfy the requirements under the regulations.

Background

Financial institutions are regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in the UK. This means that financial institutions must comply with certain regulatory requirements, including how they contract with service providers. The regulations on this subject matter changed on 30 September 2019, when the European Banking Authority Guidelines on Outsourcing Arrangements (the EBA Guidelines) came into force. The EBA Guidelines include requirements that cover how financial institutions enter into and monitor arrangements with third parties for the supply of services. The regulations are very prescriptive and the extent to which they apply depends on whether the arrangements involve the outsourcing of a critical or important operational function (commonly referred to as material outsourcings), or if they can be categorized into all other forms of outsourcing (commonly referred to as non-material outsourcings).

In addition to the EBA Guidelines on outsourcing, the PRA has rules which have been implemented to support the operational continuity of the critical functions of financial institutions. These rules (operational continuity in resolution (OCIR)) ensure that agreements with suppliers of critical services to the financial institution include specific provisions, in order  to safeguard the provision of these services in challenging circumstances.

With BRYTER, it is possible to build an Outsourcing Navigator which ensures that financial institutions are complying with the relevant regulations on outsourcing arrangements, implemented by the PRA and FCA. The tool guides users through the regulations by interacting with a questionnaire that collects all the necessary data inputs. These inputs are then reviewed against the regulatory requirements. Based on the result of the screening, the tool guides users to relevant actions that must be taken to ensure compliance. Additionally, a register is updated which contains the data collected across each screening process. This provides a list of all outsourcing arrangements (as required by the regulations) or potential outsourcing arrangements, as well as a record of why each decision has been made, which can be easily reviewed in the future.  

Benefits

Automated & Standardized

The EBA Outsourcing Arrangements Navigator is an automated application to ensure that all outsourcing arrangements are compliant with the relevant regulations. It enables financial institutions to adopt a consistent approach in relation to outsourcing arrangements and to document this compliance.

Faster Execution

The EBA Outsourcing Arrangements Navigator speeds up compliance efforts and can save up to 70% of the time spent on outsourcing compliance checks. It replaces the need to frequently contact the legal and compliance departments.

Centralized audit trail

Within the EBA Outsourcing Arrangements Navigator, all relevant inputs and assessments can be tracked and documented in a centralized register. This makes it easy for financial institutions to demonstrate compliance.

Integrated

The EBA Outsourcing Arrangements Navigator can easily be integrated into an existing IT infrastructure. It can also be intertwined with other tools and databases in order to enable a seamless outsourcing arrangements workflow.

Highly customizable

Every application built on BRYTER is customizable. The EBA Outsourcing Arrangements Navigator may reflect a financial institution’s unique guidelines, processes and workflows.

How it works

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Provide information

Through a customizable and user-friendly questionnaire, all the relevant information needed for an assessment is collected and processed. Based on the provided information, the EBA Outsourcing Arrangements Navigator assesses the outsourcing arrangement against the applicable regulations.

Receive guidance

The tool provides the user with clear step-by-step guidance on the regulations, together with actionable tasks. This ensures compliance with all applicable outsourcing regulations.

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Understand risks

A register that contains all conducted assessments and respective outcomes gives financial institutions an overview of all outsourcing arrangements, including those captured by the regulations. The assessments are recorded in a centralized source in order to prove compliance with outsourcing regimes if required.