12.3 Termination rights

The financial entity should be able to terminate the third-party arrangements, in accordance with applicable law, including in the following situations:

• a. where the TPSP is in a significant breach of applicable law, regulations, or contractual provisions;
• b. where circumstances identified throughout the monitoring that are deemed capable of altering the performance of the service provided, including material changes that affect the arrangement or the situation of the TPSP are identified;
• c. where there are material changes affecting the third-party arrangement or the TPSP (e.g. subcontracting or changes of subcontractors);
• d. where there are evidenced weaknesses pertaining to its risk management and security of confidential, personal or otherwise sensitive data, or non-personal data;
• e. where the competent authority can no longer effectively supervise the financial entity as a result of the conditions of, or circumstances related to, the respective contractual arrangement.

The third-party arrangement should facilitate the transfer of the services supporting a critical or important function provided by the TPSP to another TPSP or its re-incorporation into the financial entity. To this end, the written third-party arrangement should:

• a. clearly set out the obligations of the existing TPSP in the case of a transfer of the services supporting a critical or important function provided by the TPSP to another TPSP or back to the financial entity, including the treatment of data;
• b. set an appropriate transition period, during which the TPSP, after the termination of the arrangement, would continue to provide the services supporting a critical or important function to reduce the risk of disruptions; and
• c. include an obligation of the TPSP to support the financial entity in the orderly transfer of the services supporting a critical or important function in the event of the termination of the third-party arrangement.