3 steps to that ensure your payment institution’s or electronic money institution’s outsourcing contracts comply with the FCA’s requirements


Outsourcing is a valuable tool and often critical in the operation of payment institutions and electronic money institutions. Given its importance, it is no surprise the FCA have a taken a keen interest in the monitoring of outsourced contracts. Payment institutions and electronic money institutions need to ensure that their arrangements with third parties are compliant with the FCA’s expectations. Follow the steps below to assist you.

Step 1 – assess the situation

Many payment institutions and electronic money institutions have had outsourcing arrangements in place for years, so the FCA have made it a priority to ensure that legacy arrangements are compliant with European Banking Authority’s guidelines. The FCA asked firms to report to them, by 31 March 2022, on any shortcomings in outsourcing contracts as they relate to an outsource of a ‘critical or important function’. Naturally, the FCA are most concerned about those outsourced functions that are crucial to the continued operation and resilience of a firm.

Accordingly, if you have not already done so, you should:

  • create a list of the third parties which provide your payment institution or electronic money institution with services;
  • determine if those services amount to an outsource or not – there is a set definition of outsourcing but it is not always an easy task to determine whether a service amounts to an outsource or not and there are a few exceptions which you should be aware of;
  • determine whether any of those outsourced services are “critical or important” – deciding whether an outsource is “critical or important” is sometimes complex, makes the contract a higher priority for the FCA and effects the terms that need to be included in the contract, so seek help on this if you are not sure;
  • find and centrally store all of your contracts with third parties – without having your contracts organised and accessible, ensuring the compliance of every contract will be significantly more difficult;
  • create a register of all outsourcing arrangements and make sure the register complies with the European Banking Authority’s guidelines.

Step 2 – review existing contracts

Once you have all your contracts organised, the next step is to ensure they meet the FCA’s requirements and European Banking Authority’s guidelines. This will involve conducting a gap analysis of each contract.

The FCA have specific requirements each of your outsourced contracts must address, in the appropriate way, including (amongst other things) the following topics:

  • access, information, and audit rights;
  • termination rights;
  • transfer rights;
  • compliance of security and data systems; and
  • sub-outsourcing – particularly of critical or important functions.

These contracts can be complex, but the FCA have made it clear that, as these contracts can directly effect the service provided to customers, they must be compliant and up-to-date.

Step 3 – engage a trusted legal professional

Undertaking a full audit of your firms outsourcing arrangements can be a daunting task – particularly when you might be faced with critically reviewing dozens of outsourcing contracts and commercial relationships. Further, ensuring that each contract complies with the myriad of requirements set out by the FCA and the European Banking Authority may be more daunting still. You will also want to ensure that contracts you enter into in future comply with the FCA’s requirements from day one rather than having to do a much more cumbersome and costly remediation exercise later on. That’s where specialist help from Creed Solicitors can help.

With many years’ experience in working with payment institutions and electronic money institutions, Creed Solicitors can assist your firm to:

  • help you understand which services amount an outsource;
  • review and amend your contracts to meet the requirements set by the FCA and the European Banking Authority;
  • negotiate any changes to contracts with your service providers; and
  • draft new contracts which comply with the FCA’s requirements for outsourced contracts.

To get our help, call +44 2890 650 481 or book a free 30-minute video consultation by clicking on the link below, where we will review your outsourcing arrangements and explore ways in which Creed Solicitors can help you bridge any shortfalls in your outsourcing compliance.


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