On 25 February 2021 the Central Bank of Ireland (the "CBI") published CP138 - Consultation on Cross-Industry Guidance on Outsourcing (the "Consultation"). The Consultation is accompanied by Draft Cross Industry Guidance on Outsourcing (the "Draft Guidance").
The CBI invites general feedback on the Draft Guidance from interested stakeholders, including firms, representative bodies, industry consultancies and service providers. The Consultation process is open until 26 July 2021. The CBI proposes to publish a final version of the guidance in 2021 following the completion of the Consultation.
Scope of Draft Guidance
The Draft Guidance will apply to all regulated firms which utilise outsourcing as part of their business model. Firms are required to apply the Draft Guidance in a proportionate manner.
Interaction with existing requirements
Outsourcing is already regulated under various sector-specific financial services legislation (including MiFID II and PSD2) and numerous regulatory authorities have published guidance on outsourcing, which are applicable to firms within the scope of any specific guidance.
The Draft Guidance does not replace or override any legal and/or regulatory requirements. In the event of a discrepancy between the Draft Guidance and the relevant sectoral legislation, the primacy of the legislation will apply.
The Draft Guidance is comprehensive and sets out detailed requirements in respect of the following areas:
- Assessment of criticality or importance of outsourced services;
- Provisions regarding intragroup outsourcing arrangements;
- Governance regarding outsourcing arrangements;
- Outsourcing risk assessment and management;
- Due diligence of service providers;
- Contractual requirements with outsourced service providers;
- Ongoing monitoring and challenge of outsourcing arrangements;
- Disaster Recovery and Business Continuity Management in outsourcing; and
- Provision of outsourcing information to the CBI.
Interested firms should consider the Draft Guidance and whether they wish to respond to the Consultation.
The Draft Guidance joins a crowded line-up of sector-specific legal requirements and guidelines in respect of outsourcing. However, due to its cross-industry impact, all firms regulated by the CBI will be interested in keeping this area under review and in the final guidance when published later this year.