ICBA commended Federal Reserve Governor Michelle Bowman for her recommendations to improve newly released interagency guidance on third-party risk management.

New Guidance: Federal banking regulators this week issued final joint guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology companies.

Bowman Statement: In a dissenting statement, Bowman said the guidance does not provide the necessary clarity or supplemental tools to facilitate community bank implementation and provides no timeline for developing these resources.

ICBA Release: In a national news release, ICBA President and CEO Rebeca Romero Rainey said Bowman offered common-sense recommendations to improve the new guidance.

Mores: The final guidance:

• Describes principles and considerations for banking organizations' risk management of third-party relationships through their life cycle.

• Includes examples to help banks, particularly community banks, align their risk management practices with the nature and risk profile of their third-party relationships.

• Cites the agencies’ plan to engage with community banks and develop additional resources to assist them in managing relevant third-party risks.

• Replaces each agency's existing general third-party guidance, including the OCC’s third-party frequently asked questions, which provided practical context.

ICBA View: In a 2021 comment letter, ICBA advocated consolidating third-party risk management guidance, more fully recognizing the potential benefits of community bank-fintech partnerships, and structuring the guidance so it can be further tailored. ICBA will continue working with the agencies to produce community bank-focused resources that will facilitate implementation and sound risk management.