OSFI Releases Final Guideline B-10 Impacting FRFIs Engaging In Business With Third Parties

On April 24, 2023, the Office of the Superintendent of Financial Institutions (“OSFI”) published its final Third-Party Risk Management Guideline (the “Guideline”) coming into effect May 1, 2024. The Guideline has been introduced to manage risks arising from third-party arrangements and applies to all federally regulated financial institutions (“FRFIs”) with the exception of foreign bank and insurance branches (who are subject to certain outsourcing requirements as set out in Guideline E-4). Of the many outcomes and principles detailed in the Guideline, OSFI expects FRFIs to assess risk and criticality when examining third-party arrangements to determine how and to what extent to apply each principle. In April 2022, OSFI released a draft of the “new” Guideline B-10 that was subject to a consultation period. Since the draft, OSFI has clarified the scope and extent of risk assessments to be completed by FRFIs. They have also increased emphasis on using a risk-based