Skip to main content
Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

FDIC Seeks Comments on Proposed Guidance for Third-Party Lending

FDIC Online Lending Risk Management Vendor Management

Consumer Finance

On July 29, the FDIC issued FIL-50-2016 to request comments on the agency’s proposed Guidance for Third-Party Lending, which aims 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.” Pursuant to the proposed guidance, third-party lending would be defined as “a lending arrangement that relies on a third party to perform a significant aspect of the lending process.” Intended to supplement the FDIC’s 2008 Guidance for Managing Third-Party Risk, the proposed guidance seeks to establish specific expectations for third-party lending arrangements. FIL-50-2016 includes 10 questions related to (i) the proposed definition of third-party lending and the scope of the guidance; (ii) the potential risks arising from the use of third parties, with a particular emphasis on risks associated with third-party lending programs; (iii) the proposed expectations for establishing a third-party lending risk management program, including expectations around strategic planning policy development, risk assessment, due diligence and ongoing oversight, model risk management, vendor oversight, and contract structuring and review; (iv) supervisory considerations, including, but not limited to, credit underwriting and administration, loss recognition practices, and consumer compliance; and (v) the proposed examination procedures, which would establish “a 12-month examination cycle for institutions with significant third-party lending programs, including for those institutions that may otherwise qualify for an 18-month examination cycle.” Comments on the proposed guidance, with a particular emphasis on the questions posed in FIL-50-2016, are due by October 27, 2016.