In the prepaid arena, financial institutions hold the important responsibility of managing and training 4th-party “downstream” vendors, but there is much to be done for third-party vendors if those responsibilities are to be fulfilled. This is the topic we’ll be talking up next week as we participate in “Prepaid Off The Record Session: Know Your Third Party Vendors,” a round-table discussion to be held during the APEX: ALL PAYMENTS EXPO slated for The Hyatt Regency, New Orleans, from March 20 through March 23. The session will be held on Monday, March 21, from 1:15 to 2:15 pm.
Our key message is, it’s very clear that financial institutions—as well as the vendors that serve them and are charged with managing “downstream” fourth-party crucial vendors—must focus heavily on communication with third-party vendors. Third-party vendors that do not fall into the financial services category require information and training. Otherwise, it will be impossible for the oversight process to be of maximum efficiency and effectiveness.
Financial institutions and vendors with fourth-party vendor management responsibilities must educate downstream vendors about why the oversight process is necessary, the information needed for it to occur, and how the information should be provided it. Third-party vendors must be told, in the most articulate and crystal-clear manner possible, what is required from them in order to achieve these efficiency and effectiveness goals.
To be more specific, financial institutions are in the midst of configuring robust vendor management programs. However, they are probably exerting more effort than necessary as they do so, and would experience fewer difficulties along the way if the third-party vendors that are actually doing the program creation work had an understanding of what information is needed for the review process to occur and how to provide it. Maybe employee training records would be of help. Perhaps an employee risk management program, including background check, or a compliance program for risks associated with UDAPP (Unfair Deceptive or Abusive Acts or Practices), or a written vendor management program for fourth-party vendors. Compliance team qualifications and ongoing training information may belong on the list as well.
We will explore all of this—and more—in the session. And if you’re at APEX, we would love to meet you. Get in touch by texting us at (678) 333-3254, or through the APEX app.