US regulators issue proposed guidance on banks' third-party risk management

Odaily reports: US regulators announced on Friday that they have published proposed guidance on banks' third-party risk management. The Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration stated that the proposal is intended to help banks and credit unions "better align and tailor their third-party risk management practices to match the risks of each individual third-party relationship."

Federal Reserve staff said in a memo that the plan comes as banks are increasingly outsourcing certain functions and relying on third-party relationships to improve efficiency and reduce costs. The plan will be open to public comment, is non-binding, and aims to focus institutions' supervision of such risks on a principles-based approach. Federal Reserve Governor Barr opposed the proposal, citing concerns about the "material financial risk" standard.