U.S. Regulators Propose Guidance on Bank Third-Party Risk Management

U.S. regulators on Friday issued a statement announcing proposed guidance on bank third-party risk management. According to Odaily, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration said the proposal is intended to help banks and credit unions better tailor their third-party risk management practices to the risks of each relationship. Fed staff said in a memo that the plan comes as banks increasingly outsource some functions and rely on third-party relationships to improve efficiency and lower costs. The proposal will be open for public comment, is nonbinding, and is meant to shift supervisory focus toward a principles-based approach. Fed Governor Michael Barr opposed the proposal, citing concerns over the standard for "material financial risk."