The Office of the Superintendent of Financial Institutions
(OSFI) recently released the final version of its revised
"Guideline B-10 on Outsourcing Business Activities, Functions
and Processes" (Guideline).
last issue of the TLQ, we provided federally regulated
financial entities (FREs) with an overview of the proposed changes.
Now that the final Guideline has been released, what must FREs do
to comply — and when?
You are party to an outsourcing agreement. You
must review your agreement to ensure that it:
specifies the measures, to be taken by the service provider for
ensuring that continuation of the outsourced business activity,
will anticipate not only problems affecting the service
provider's operation but also events, including reasonably
includes a provision that requires the service provider to
address any material deficiencies uncovered during its regular
tests of its business recovery system, in addition to notifying you
of the tests' results (because you are expected to provide a
summary of these results to OSFI upon reasonable notice);
identifies the physical location of the performance of the
services when indicating "where" the service provider
will provide the service; and
provides for the development and maintenance of a business
continuity plan that is "appropriate" if you are party to
intra-group material outsourcing agreements. (Unfortunately, the
Guideline does not provide any guidance as to what this new
When? Right away. There is no transitional period provided to
ensure compliance with the Guideline, unless your outsourcing
agreement was entered into prior to December 15, 2004 or was
obtained as a result of an acquisition — in which case,
you must ensure compliance with the first three requirements above
"at the first opportunity," such as the time the
outsourcing contract, agreement or statement of work (where
applicable) is substantially amended, renewed or extended.
You are planning to substantially amend your outsourcing
agreement. In the past, you were only required to
undertake a due diligence process assessing the risks associated
with your outsourcing arrangement in selecting a service provider
or renewing a contract or outsourcing agreement. Under the revised
Guideline, you are now expected to undertake this process any time
your agreement is substantially amended. The Guideline does not
give any indication of what, in OSFI's view, would constitute a
"substantial" amendment. At a minimum, any material
change to the nature of the services being provided (such as the
addition of a new service tower), the scope of the services being
provided (such as the addition of a new business unit or a
significant new volume of business), or the way the services are
being delivered (such as a change in the location from which the
services are delivered or a subcontracting of a significant portion
of the services), would likely fall into this category.
You have just obtained an outsourcing arrangement as a
result of an acquisition. If you have obtained outsourcing
arrangements through an acquisition, you are expected to comply
with the Guideline at the first opportunity, such as the time the
outsourcing contract, agreement or statement of work is
substantially amended, renewed or extended.
You have multiple outsourcing arrangements with the same
provider. When assessing the materiality of an outsourcing
arrangement, you must now take into account the impact that
multiple outsourcing arrangements with a single service provider
may have, in the aggregate, on you. OSFI expects you to consider
the relevant risk management expectations set out under its risk
management program — to the extent feasible and
reasonable in the circumstances. You must therefore reassess the
materiality of all outsourcing arrangements previously qualified as
"immaterial," taking into account this new factor; if, in
the aggregate, all such agreements taken as a whole are material,
they must meet the standards established in the Guideline and may
need to be renegotiated to achieve this.
When? Right away.
The annual review of your provider is coming
up. Your annual review of your service provider to
ascertain its ability to continue to deliver the service in the
manner expected is now to be commensurate with the level of risk
involved with each particular outsourcing arrangement (determined
further to the due diligence processes required by the Guideline).
In addition, since your review must now also assess the use and
performance of significant subcontractors, you should ensure that
the outsourcing arrangements with your providers provide you with
the necessary flexibility to adequately perform this subcontractor
assessment and administer appropriate remedies if the results of
the review are not satisfactory.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).