Regulators have tightened their expectations around how financial institutions manage outsourced service providers, cloud vendors, fintech partners, and external contractors. The recently issued Joint Standard on Outsourcing and Third-Party Risk now formalises the Third-Party Supervision Requirements that all regulated entities must meet to ensure operational resilience, customer protection, and regulatory accountability.
In this blog, we unpack what the Joint Standard means, why it matters, and how organisations can start embedding the Third-Party Supervision Requirements into their governance frameworks.
Why Third-Party Supervision Matters More Than Ever
Financial institutions today operate within interconnected digital ecosystems. Core functions such as onboarding, data hosting, payments, AML screening, cybersecurity, and cloud services often rely on external providers. This increases exposure to:
- Cyber breaches
- Data loss
- Operational downtime
- Compliance failures
- Customer harm
- Reputational damage
The Joint Standard elevates these risks by establishing strict Third-Party Supervision Requirements that ensure regulated entities retain full accountability — even when activities are outsourced.
Key Elements of the Joint Standard
1. A Risk-Based Approach to All Third-Party Relationships
Institutions must classify, assess, and monitor the risk level of each third-party provider. The Third-Party Supervision Requirements emphasise proportional oversight — meaning high-risk or material outsourcing must be governed with stronger controls, enhanced due diligence, and structured reporting.
2. Strengthened Governance and Board Accountability
Boards and executive committees must demonstrate:
- Clear oversight of outsourcing activities
- Accountability for third-party risk
- Regular monitoring of performance and resilience
- Reporting mechanisms aligned to the Third-Party Supervision Requirements
You can outsource the function — but never the responsibility.
3. Comprehensive Pre-Contract Due Diligence
No outsourcing arrangement may be initiated without rigorous due diligence, covering:
- Cybersecurity
- Data protection
- Operational resilience
- Subcontracting layers
- Compliance history
- Financial stability
This forms a critical part of the Third-Party Supervision Requirements to prevent blind reliance on vendors.
4. Robust Contract Management
Contracts must clearly outline:
- Roles and responsibilities
- SLAs and KPIs
- Data handling obligations
- Termination and exit rights
- Audit and inspection rights
Regulators expect contracts to directly reflect the Third-Party Supervision Requirements.
5. Ongoing Monitoring and Assurance
Outsourcing oversight is not a once-off process — it must be continuous. This includes reviewing performance, auditing controls, monitoring incidents, validating cybersecurity posture, and assessing compliance. The Joint Standard requires institutions to show real evidence of meeting the Third-Party Supervision Requirements, not simply documentation.
How Organisations Can Prepare
To meet the Third-Party Supervision Requirements, institutions should begin by:
✔ Conducting a comprehensive TPRM gap assessment
✔ Building or uplifting their third-party risk frameworks
✔ Enhancing due diligence and contracting processes
✔ Implementing ongoing monitoring and vendor scorecards
✔ Strengthening technology, cyber, and data oversight
✔ Training teams on regulatory expectations
Early preparation reduces future remediation costs, strengthens resilience, and builds trust with regulators.
How Navigate Can Support You
Navigate helps regulated entities implement the Third-Party Supervision Requirements with end-to-end support across:
- Third-party risk assessment & gap analysis
- Policy and framework development
- Outsourcing register & risk classification methodology
- Contract review and SLA uplift
- Data governance & cybersecurity alignment
- Vendor monitoring dashboards
- Board & Exco training
- Full programme and project management for regulatory rollout
Strengthen Your Third-Party Supervision with Navigate
Navigate is a licensed FSCA compliance practice, QCTO-accredited training provider, and specialist project management & resourcing firm.
We help regulated organisations build resilient, compliant, and future-ready ecosystems.
👉 Book a TPRM Readiness Session
📩 info@navcompliance.co.za
🌐 https://www.navigatecompliance.io