OCC 2017 FAQ 4 – When multiple banks use the same third-party service providers, can they collaborate to meet expectations for managing third-party relationships specified in OCC Bulletin 2013-29?

Compliance > Third Party Relationships / Vendor Mgmt.
Q:  When multiple banks use the same third-party service providers, can they collaborate to meet expectations for managing third-party relationships specified in OCC Bulletin 2013-29?
 
A:  If they are using the same service providers to secure or obtain like products or services, banks may collaborate2 to meet certain expectations, such as performing the due diligence, contract negotiation, and ongoing monitoring responsibilities described in OCC Bulletin 2013-29. Like products and services may, however, present a different level of risk to each bank that uses those products or services, making collaboration a useful tool but insufficient to fully meet the bank’s responsibilities under OCC Bulletin 2013-29. Collaboration can leverage resources by distributing costs across multiple banks. In addition, many banks that use like products and services from technology or other service providers may become members of user groups. Frequently, these user groups create the opportunity for banks, particularly community banks, to collaborate with their peers on innovative product ideas, enhancements to existing products or services, and customer service and relationship management issues with the service providers. Banks that use a customized product or service may not, however, be able to use collaboration to fully meet their due diligence, contract negotiation, or ongoing responsibilities.
 
Banks may take advantage of various tools designed to help them evaluate the controls of third-party service providers. In general, these types of tools offer standardized approaches to perform due diligence and ongoing monitoring of third-party service providers by having participating third parties complete common security, privacy, and business resiliency control assessment questionnaires. After third parties complete the questionnaires, the results can be shared with numerous banks and other clients. Collaboration can result in increased negotiating power and lower costs to banks during the contract negotiation phase of the risk management life cycle.
 
Some community banks have joined an alliance to create a standardized contract with their common third-party service providers and improve negotiating power.
 
 
ADDITIONAL INFORMATION:
This information was obtained from the OCC’s Bulletin 2017-21 – Frequently asked Questions to Supplement OCC Bulletin 2013-29 - https://www.occ.gov/news-issuances/bulletins/index.html
 

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