New Danish regulation of outsourcing for credit institutions etc
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On 1 July 2020, executive order no. 877 of 12 June 2020 on outsourcing for credit institutions etc. (Outsourcing Order) will replace the current executive order on outsourcing of significant areas of activity no. 1304 of 25 November 2010. The Outsourcing Order implements the European Banking Authority's (EBA) Outsourcing Guidelines that became effective in September 2019.
The Outsourcing Order introduces revised and new requirements to credit institutions; mortgage-credit institutions; investments firms; investment management companies; savings undertakings; shared data centres; operators of regulated markets; e-money institutions; payment institutions and Danmarks Skibskredit A/S.
The Outsourcing Order introduces stricter requirements to companies' governance setup and to new and existing outsourcing agreements. Companies subject to the Outsourcing Order need to implement a revised and extended governance setup by 1 July 2020 and identify and renegotiate existing outsourcing agreements not fulfilling the new requirements by 31 December 2022. Read more in our Outsourcing Guide here.
On 17 February 2020, the Danish Financial Supervisory Authorities (Danish FSA) published the executive order for consultation. The final version includes a number of amendments and clarifications including a postponement of the deadline for compliance for existing outsourcing agreements from 31 December 2021 to 31 December 2022. Further, it has been clarified that outsourcing agreement covering critical or important outsourcing shall comply with the requirements in appendix 3 while non-critical/non-important outsourcing only need to comply with the requirements in appendix 3(3).
