OSFI revises its outsourcing of business activities guideline

The Office of the Superintendent of Financial Institutions Canada (OSFI) has set out its expectations for federally regulated entities (FRE) that outsource or contemplate the outsourcing of one or more business activities to a service provider.
The revisions to Guideline B-10 include:
•    A transition measure to bring outsourcing arrangements that are obtained as part of an acquisition by the FRE into compliance with the guideline;
•    A clarification of the expectation that, as part of the FRE’s materiality test, a FRE would need to consider the potential influence on the FRE of multiple outsourcing arrangements with a single service provider;
•    A clarification of the expectation that the FRE should ensure that the service provider regularly tests its business recovery system as it pertains to the outsourced activity, and that the FRE should ensure that a service provider addresses any material deficiencies;
•    A clarification that the FRE will receive a notice from OSFI if OSFI chooses to exercise its audit rights. OSFI would share any findings with the FRE, where appropriate; and
•    A clarification of the expectation that the FRE’s review of the service provider’s ability to continue to deliver the service in the manner expected should be commensurate with the level of risk involved.