The Federal Deposit Insurance Corp., the Federal Reserve Board, the National Credit Union Administration, and the Office of the Comptroller of the Currency released new proposed guidance on third-party risk management. This initiative aims to help financial institutions better align their risk management practices with the specific risks posed by individual third-party relationships.
The proposed guidance is non-binding and is intended to replace existing regulatory frameworks. It seeks to reduce administrative burdens, particularly for community banks, by moving away from broad, generalized approaches. The regulators aim to provide clearer expectations regarding the supervision and enforcement of core service providers.
Regulators have opened a 60-day public comment period following the publication of the proposal in the Federal Register. Additionally, the Federal Reserve has requested feedback on a separate, companion guide specifically designed for community banks under its supervision.
A joint statement from the Federal Reserve, the FDIC, and the OCC highlights factors that will influence future supervisory and enforcement decisions concerning core service providers. The agencies noted that while these partnerships are essential for operations, current market dynamics may hinder a bank's ability to manage risks effectively.
