Finanstilsynet inspection of Josie Realkredit outsourcing

Statement of inspection in Jyske Realkredit A / S (outsourcing)

In May 2019, the Danish FSA was on inspection in Jyske Realkredit A / S regarding the institute’s use of outsourcing.

The inspection included a review of Jyske Realkredit A / S ‘organization, internal guidelines for outsourcing, overview of the Institute’s outsourcing agreements and reporting and control.

Summary and risk assessment

Jyske Realkredit A / S is outsourcing a number of important areas of activity, including, for example, consulting and credit rating of private customers.

The Financial Supervisory Authority considered that Jyske Realkredit A / S did not adequately analyze and review the benefits and risks prior to the decision to outsource significant areas of activity. The decision-making process seems to have been rushed so that the decisions are not made on an insufficiently informed basis. The subsequent follow-up to the decisions has also been inadequate.

The FSA considered that the failure to analyze the consequences of the extensive outsourcing has resulted in non-compliance with the rules on outsourcing and management and management.

Jyske Realkredit A / S received an injunction to prepare a sufficient decision base, including analyzing risks and requirements for the organizational set-up in connection with the decision to outsource important functions.

The Danish Financial Supervisory Authority considered that Jyske Realkredit A / S’s outsourcing policy was insufficient, as several uncertainties and shortcomings were found, including for example which outsourcing is covered by the policy. Jyske Realkredit A / S was therefore instructed to expand the policy of outsourcing.

The Financial Supervisory Authority found that Jyske Realkredit A / S had appointed an outsourcing officer, but no job description or business procedures had been prepared that sufficiently placed the responsibility for the task in connection with the outsourcing. Jyske Realkredit A / S was therefore instructed to clarify job descriptions and business procedures in the outsourcing area.

The Danish Financial Supervisory Authority found that the Institute did not consider outsourcing of the tasks performed by the legal department and of the compliance function to be significant outsourcing. The Danish FSA does not agree with this assessment. Jyske Realkredit A / S was therefore instructed to bring the cooperation agreements entered into on this point in accordance with the requirements of significant outsourcing.

The FSA found that the contractual basis was not sufficiently detailed on several points. Jyske Realkredit A / S was therefore instructed to elaborate the outsourcing contracts with greater clarity.

Jyske Realkredit A / S had per. At the end of the second quarter of 2019, its solvency need was calculated at 9.8%. Actual solvency was 21.9 per cent, which, in addition to the solvency need, would cover buffer requirements totaling 4.5 per cent. The inspection did not entail a need for reassessment of the solvency need.

Link:

Finanstilsynet inspection statement

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