Page 4 - Knowledge_Insights_Brochure V9

3 MATERIAL EVENTS:

The Central Bank advises that supervisors have noted both “absences and weaknesses” in
clauses in SLAs in respect of reporting requirements for material events that may affect an
OSP’s ability to provide a service, as well as an RF’s ability to perform on-going monitoring
and challenge of arrangements at board level.

Consequently, it is imperative for RFs to ensure the inclusion of detailed
reporting obligations on the OSP in the SLA.

4 CLEAR FRAMEWORK FOR REVIEW OF SLAS:

The Central Bank stressed that as a result of the high-profile nature of some large OSPs
collapses in recent years, “the importance of robust due diligence of any OSP and the
appropriate and regular monitoring of adherence by those OSPs to the agreed service levels
has come into sharp focus”. On this point, however, the results of the Central Bank’s
survey demonstrated clearly that RFs are “not consistently reviewing SLAs on a frequency
appropriate to the criticality or importance of the service outsourced”.

One particularly stark statistic detailed was that 17% of the SLAs in place had not been
reviewed in over three years and some had not been reviewed since their inception.

As a consequence, the Central Bank identified that, as a minimum
requirement, the terms of an SLA and an OSP’s adherence to the SLA, must
be reviewed at least annually and particularly where there are material
changes to an RF’s business model.

5 ACCESS FOR FIRMS AND REGULATORS:

One of the critical points made by the Central Bank in the DP is around the importance
to both the RF and the relevant regulator of being able to gain access to the OSP in order
to carry out inspections, assurance testing etc. The Central Bank states that it is “aware
of cases where regulated firms have been denied access to OSPs, preventing them from
carrying out assurance testing”.

As a result, the Central Bank clearly sets out that SLAs must include
provisions permitting RFs and their regulators “access to carry out the
necessary quality assurance and supervisory work”.

3 DISCUSSION PAPER 8 – OUTSOURCING FINDINGS AND ISSUES FOR DISCUSSIONS www.matheson.com

26/02/2020 12:13
DIR4551_Math_Knowledge_Insights_Brochure V9.indd 3
DIR4551_Math_Knowledge_Insights_Brochure V9.indd 3 26/02/2020 12:13