Federal Deposit Insurance Corporation
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-50-2016
July 29, 2016
FDIC Seeking Comment on Proposed Guidance
for Third-Party Lending
Distribution:
FDIC-Supervised Institutions
Suggested Routing:
Chief Executive Officer
Chief Credit Officer
Chief Risk Officer
Related Topics:
Guidance for Managing Third-Party Risk,
FIL-44-2008
Attachment:
Guidance on Third-Party Lending - PDF
(PDF Help)
Contact:
Rae-Ann Miller, Associate Director, 202-
898-3898
Notes:
Access FDIC Financial Institution Letters
(FILs) on the FDIC's website.
Subscribe to receive FILs electronically.
Paper copies may be obtained through the
FDIC's Public Information Center, 3501
Fairfax Drive, E-1002, Arlington, VA 22226
(877-275-3342 or 703-562-2200).
Comment period extended to October 27, 2016 - see Press Release: FDIC Extends
Comment Period on Third-Party Lending Guidance
Summary:
The FDIC is seeking comment on proposed Guidance for Third-Party Lending to set
forth safety and soundness and consumer compliance measures FDIC-supervised
institutions should follow when lending through a business relationship with a third
party. The proposed guidance is intended to supplement the FDIC's existing
Guidance for Managing Third-Party Risk, which is applicable to any of an institution's
third-party arrangements, including lending through a third party.
Statement of Applicability to Institutions with Total Assets Under $1 Billion:
This Financial Institution Letter applies to all FDIC-supervised institutions that engage
in third-party lending.
Highlights:
• The proposed guidance defines third-party lending as an arrangement that relies
on a third party to perform a significant aspect of the lending process. Categories
include (but are not limited to): institutions originating loans for third parties;
institutions originating loans through third parties or jointly with third parties;
and institutions originating loans using platforms developed by third parties.
• An institution's board of directors and senior management are ultimately
responsible for managing third-party lending arrangements as if the activity were
handled within the institution. However, managing and controlling risks can be
challenging when origination volumes are significant or there are numerous
third-party relationships.
• The proposed guidance emphasizes that institutions should establish a third-
party lending risk management program and compliance management system
(CMS) that is commensurate with the significance, complexity, risk profile,
transaction volume, and number of third-party lending relationships. Consistent
with existing guidance, the risk management program and CMS should address
risk assessment, due diligence and oversight, and contract structuring when
selecting and managing individual third-party lending relationships.
• For institutions that engage in significant lending activities through third parties
the proposal includes increased supervisory attention, including a 12-month
examination cycle, concurrent risk management and consumer protection
examinations, offsite monitoring, and possible review of third parties.
• Comments are sought on the entire proposed guidance with particular emphasis
on those areas outlined in the introductory letter. Comments will be accepted
until September 12, 2016. Comments should be sent
to thirdpartylending@fdic.gov and will be posted on the FDIC's website
at https://www.fdic.gov/regulations/laws/publiccomments/.
Continuation of FIL-50-2016Inactive
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-50-2016
July 29, 2016
FDIC Seeking Comment on Proposed Guidance
for Third-Party Lending
Distribution:
FDIC-Supervised Institutions
Suggested Routing:
Chief Executive Officer
Chief Credit Officer
Chief Risk Officer
Related Topics:
Guidance for Managing Third-Party Risk,
FIL-44-2008
Attachment:
Guidance on Third-Party Lending - PDF
(PDF Help)
Contact:
Rae-Ann Miller, Associate Director, 202-
898-3898
Notes:
Access FDIC Financial Institution Letters
(FILs) on the FDIC's website.
Subscribe to receive FILs electronically.
Paper copies may be obtained through the
FDIC's Public Information Center, 3501
Fairfax Drive, E-1002, Arlington, VA 22226
(877-275-3342 or 703-562-2200).
Comment period extended to October 27, 2016 - see Press Release: FDIC Extends
Comment Period on Third-Party Lending Guidance
Summary:
The FDIC is seeking comment on proposed Guidance for Third-Party Lending to set
forth safety and soundness and consumer compliance measures FDIC-supervised
institutions should follow when lending through a business relationship with a third
party. The proposed guidance is intended to supplement the FDIC's existing
Guidance for Managing Third-Party Risk, which is applicable to any of an institution's
third-party arrangements, including lending through a third party.
Statement of Applicability to Institutions with Total Assets Under $1 Billion:
This Financial Institution Letter applies to all FDIC-supervised institutions that engage
in third-party lending.
Highlights:
• The proposed guidance defines third-party lending as an arrangement that relies
on a third party to perform a significant aspect of the lending process. Categories
include (but are not limited to): institutions originating loans for third parties;
institutions originating loans through third parties or jointly with third parties;
and institutions originating loans using platforms developed by third parties.
• An institution's board of directors and senior management are ultimately
responsible for managing third-party lending arrangements as if the activity were
handled within the institution. However, managing and controlling risks can be
challenging when origination volumes are significant or there are numerous
third-party relationships.
• The proposed guidance emphasizes that institutions should establish a third-
party lending risk management program and compliance management system
(CMS) that is commensurate with the significance, complexity, risk profile,
transaction volume, and number of third-party lending relationships. Consistent
with existing guidance, the risk management program and CMS should address
risk assessment, due diligence and oversight, and contract structuring when
selecting and managing individual third-party lending relationships.
• For institutions that engage in significant lending activities through third parties
the proposal includes increased supervisory attention, including a 12-month
examination cycle, concurrent risk management and consumer protection
examinations, offsite monitoring, and possible review of third parties.
• Comments are sought on the entire proposed guidance with particular emphasis
on those areas outlined in the introductory letter. Comments will be accepted
until September 12, 2016. Comments should be sent
to thirdpartylending@fdic.gov and will be posted on the FDIC's website
at https://www.fdic.gov/regulations/laws/publiccomments/.
Continuation of FIL-50-2016Inactive