OCC standards require strict oversight of third-party relationships

It’s no longer enough for banks and other financial institutions to simply have good working relationships with the third parties that provide IT and other services.

Stricter standards and increased scrutiny by the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB), as well as the Federal Deposit Insurance Corporation (FDIC) and the Federal Financial Institutions Examination Council (FFIEC), mean financial institutions now have the same responsibilities for in-house and out-of-house services.

For many banks and non-banks, this will mean reevaluating vendor relationships and instituting increased safeguards and oversight to meet these new, stricter standards.

In short, many of the same risk management practices used for internal operations will have to be applied to vendor relationships and operations. Even if customers choose their own vendors for various services, such as real estate settlements, the CFPB says that the lender is still responsible.