3rd Party Vendor Management Services
Comprehensive Third Party Vendor Oversight
Consumers are at a real disadvantage because they do not get to choose the service providers they deal with the financial institution does, said CFPB Director Richard Cordray.
Consumers must not be hurt by unfair, deceptive, or abusive practices of service providers. Banks and nonbanks must manage these relationships carefully and can be held accountable if they break the law. CFPB
To satisfy Regulators, your third party oversight program must be comprehensive. What are the elements of a comprehensive third party oversight program?
Development of the Underpinnings
On-boarding
What are the elements of a Prospective Vendor Questionnaire? Which policies and procedures should you require? What kind of Background Check should you perform? Should you examine the vendors training program? What about their regulatory complaints? Anything else?
Underwriting
Underwriting relates to the logic or grading system you use to evaluate a prospective Vendors questionnaire, policies, background check results, types and quantity of regulatory complaints, and more.
Ongoing Audit Elements
For your existing vendors, ongoing audits are a requirement. This way, you will be able to demonstrate to regulators that your ongoing vendor monitoring is comprehensive and regular.
What should be included in your audit? Should it differ by vendor type? How frequent should I perform? How should I evaluate the audit results? What should I do if the vendor fails an audit?
Policy
Now that you have completed you onboarding elements, underwriting rules and the composition and frequency of you ongoing audits, its time to write your 3rd Party Vendor Management Policy. What should it include?
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