One recommendation – that the federal agency that insures bank deposits establish program-level goals, metrics, and indicators related to the agency’s authority to examine banks’ regional service providers – is provided in an agency inspector general report released Thursday.
The Federal Deposit Insurance Corp. (FDIC) Office of Inspector General (OIG) said it reviewed the FDIC’s regional service provider (RSP) examination program to assess the program’s effectiveness related to third-party risks to financial institutions.
The report notes the FDIC performs service provider examinations using two risk tiers: significant service provider (SSP) and RSP. “SSPs are large and complex service providers designated for special monitoring and collaborative interagency supervision at the national level. In contrast, RSPs are smaller in size, less complex, and provide services to banks within a local region,” it states. It also notes that the FDIC typically performs RSP examinations jointly with the FRB and OCC and in compliance with interagency guidance established in the Federal Financial Institutions Examination Council (FFIEC) IT Examination Handbook and the FBA Administrative Guidelines.
Finding no formal goals and metrics related to the FDIC’s RSP examination program, the OIG recommended that the FDIC’s director of risk management supervision “conduct a formal assessment of the Regional Service Provider examination program to establish program-level goals, metrics, and indicators and determine whether additional resources and controls are needed to improve the effectiveness of the program, as identified in this memorandum.”
The report says the FDIC has agreed with the recommendation that it plans to complete all corrective action by Dec. 31, 2024.
While the OIG said it considers the recommendation to be resolved, it said the recommendation “will remain open until we confirm that corrective actions have been completed and the actions are responsive.”
AEC Memorandum No. 24-01: The FDIC’s Regional Service Provider Examination Program (December 2023)