The drafts that were provided for Third Party Service Provider review this past week were really useful! I had a few suggestions/questions/comments:
1. Contract Checklist – I would add an N/A column on this worksheet as some items won’t apply to all contracts.
2. Monitoring Form – I would also add an N/A column on this worksheet and a Notes section, possible at the bottom, for comments/notes to be made by the individual reviewing.
3. Two comments on the Due Diligence form – How do we determine the second item? Signifigance of proposed contract on TPSP’s financial condition. I feel that with the majority of relationships we have with TPSP’s, this would be considered “not significant” as we are a community bank less than 500 million in assets; however, how do we best determine? Also, if we do determine this is significant, how do we proceed? Should we reconsider the relationship because the company is putting “too many eggs in one basket” or do we consider it a good thing because this provider can give us individualized attention. Just needed to work through some thoughts on this question.
Also, in our experience with establishing a review process for our TPSP’s, we are having a very difficult time receiving any information regarding financial statements, etc. We have recently reviewed two vendors that have provided us letters from their CPA firms that handle their books that attest to the strength and viability of the company but were not willing to provide financials, etc. In this case, we felt strong enough about the vendor to approve the relationship and sign the contract but I just wonder how often this is going to be an issue, and could this be a deal breaker in the end?
Thanks for the tools, I see my bank getting use out of the forms and the process!