Submission #57

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Eurofinas

Q1: Are the guidelines regarding the subject matter, scope, including the application of the guidelines to electronic money institutions and payment institutions, definitions and implementation appropriate and sufficiently clear?

 Definition of outsourcing
In our view, the definition of outsourcing used in the draft Guidelines is ambiguous and too wide in scope. As currently phrased, it would include any service provided, including those that have no link with any of the core activities of the serviced institution. We would recommend the EBA to clarify that the guidelines only apply to those activities that are within the scope of financial services provision/licensed service activities.
 Important and critical functions
We are concerned by the ambiguity of the term “important and critical function”. Does this imply that the outsourced function in question is necessarily both important and critical, or is it possible to be categorised as such when the function is only important or critical? Also, it is unclear if “important” and “critical” functions represent different levels of importance and, if yes, whether all outsourcers should be audited in the same manner.

Q12: Are the guidelines in sections 12 regarding exit strategies appropriate and sufficiently clear?

We agree with the EBA’s view that institutions need to have business continuity and contingency arrangements in place to ensure that their material business activities can be performed on a continuous basis. The EBA provides that institutions should develop and implement exit plans that are comprehensive, documented and sufficiently tested. We would welcome more clarity on the “sufficient test” requirement. More specifically, we would like the EBA to confirm that this does not require institutions to have in place alternative providers, which would be a very costly and burdensome requirement.

Q13: Are the guidelines in Section 13 appropriate and sufficiently clear, Iin particular, are there any ways of limiting the information in the register which institutions and payment institutions are required to provide to competent authorities to make it more proportionate and, relevant? With a view to bring sufficient proportionality, the EBA will consider the supervisory relevance and value of a register covering all outsourcing arrangements within each SREP cycle or at least every 3 years in regard of the operational and administrative burden.

We agree with the EBA on the importance of adequate documentation of the relevant outsourcing arrangements.
However, we are concerned about the requirement to make available the register of all existing outsourcing arrangements to the competent authority in a common data base format within each supervisory review and evaluation process. In our view, this is a too burdensome requirement, especially for smaller players, and for this reason, is also not required on national level. We believe that such regular reporting should be restricted to the critical and important outsourcing of significant institutions. Alternatively, we would recommend the ad hoc presentation of the information, rather than putting in place a register.

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Name of organisation Eurofinas