BaFin consults on draft outsourcing notification rules

On 3 December 2021, the German Financial Supervisory Authority (the Bundesanstalt für Finanzdienstleistungsaufsicht or ‘BaFin’) published drafts of several regulations regarding the new notifications which are required when making use of outsourcing.

Please see here for a copy of the drafts. (Please note that these are only available in German).

Market participants have until 23 December 2021 by which to comment on the drafts.

The notification requirements are a result of the Financial Market Stability Strengthening Act (FISG), itself a reaction to the Wirecard scandal.

The new requirements are relevant to banks, investment firms, asset managers, payment services providers and insurance companies.

The drafts set out the details of the new notification obligation.

With the new notification requirements, the legislator is aiming to increase transparency so the risks arising from outsourcing material activities and processes to an outsourcing service provider can be better monitored.

According to the legislator, the accumulation of outsourcing to specific outsourcing service providers can pose concentration risks for the entire financial market. These should be made visible by means of the newly to be introduced notification obligation.

Market participants will be required to electronically submit the notifications via BaFin's reporting and publication platform (MVP-portal). The aim is to enable the supervisory authority to systematically evaluate the data and, in particular, to identify concentration risks.

To achieve this, the draft regulations specify what information market participants must provide to comply with the new notification obligation. The new regulations also serve as a means to implement the "Guidelines on Outsourcing", published by the European Banking Authority (EBA).

Please also see our previous associated articles:

• Outsourcing – BaFin’s new notification procedure from 1 January 2022
• Outsourcing under scrutiny

Have you ever thought about delegation of your outsourcing obligations? Simmons + Simmons is set up to satisfy the new BaFin requirements and we can provide the technical and legal solutions to ensure compliance with the new notification requirements.

Please let us know if you have any questions or you would be interested in our solutions.