Four federal agencies are seeking comment on proposed guidance to help financial institutions manage risk associated with third-party relationships.
The proposed third-party risk management guidance and the request for comment were announced Friday (Sept. 11) in a joint release issued by the Federal Deposit Insurance Corp., the Federal Reserve Board, the National Credit Union Administration and the Office of the Comptroller of the Currency.
The proposed guidance is intended to help banks and credit unions better align and tailor their third-party risk management practices to the risks of individual third-party relationships, is non-binding and, when finalized, will replace the federal bank regulatory agencies’ existing third-party risk management guidance, according to the release.
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The agencies will accept comment on the proposed guidance for 60 days after its publication in the Federal Register, per the release.
The OCC said in a Friday press release that the proposed guidance is part of its effort to empower community banks and reduce their burdens.
The proposed guidance will tailor third-party risk management to actual risk, provide greater clarity regarding supervision and enforcement of core service providers, move away from overly broad approaches and encourage responsible innovation, the OCC said in its release.
“We are giving these vital institutions more freedom to do what they do best—serve their customers, support local businesses, strengthen their communities and drive economic growth across America,” Comptroller of the Currency Jonathan V. Gould said in the release, speaking of community banks.
Separately, the Federal Reserve, the FDIC and the OCC issued a joint statement on community banks’ engagement with core service providers that discusses certain factors the agencies will consider when making supervisory and enforcement decisions related to these providers, according to the joint release.
“These relationships are essential to the safe and sound operations of [community banking organizations (CBOs)], yet certain core provider business practices and market dynamics may pose obstacles to a CBO’s ability to efficiently and effectively identify, assess and address the attendant risks,” the statement said.
In addition, the Federal Reserve requested comment on a proposed third-party risk management guide for Federal Reserve-supervised community banks that is intended to serve as a companion to the four agencies’ proposed guidance, per the joint release.
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