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By Erin Bardua

Many of you know that FundSERV has been developing new contracts for all its customers. The project has been in progress for over a year now and is finally nearing completion, as discussed recently with FundSERV CFO Frank Vree.

"This project turned out to be much bigger than we ever had thought," says Vree, "primarily because of intellectual property protection and privacy legislation."

Originally, FundSERV proposed a single form agreement for use by all parties, customers and service providers alike. Comments were invited from a large pilot group of 35 companies from across the industry, eventually resulting in the decision to create a separate agreement for third parties.

Vree explains, "We created a very short agreement for these parties, which went out recently to a pilot group of five companies. We are awaiting comments on this new agreement." The new vendor agreement contains similar concepts to those addressed on the FundSERV Web site regarding access to the ESG Version 15 standards. It focuses on the protection and use of the data standards and allows vendors to use the standards only with the authorization or permission of a FundSERV customer. Vree is actively following up for responses to the revised agreement.

During the examination of the agreements, the board addressed related items such as the question of liability. Vree says, "The board instructed us to hold the course, as FundSERV has never accepted any liability. As a cooperatively run utility, our business model is cost-recovery. If we were to accept liability, we would have to mitigate the risk with insurance, which drives up the cost. Our customers' own risk mitigation is more efficient."

In addition to the new agreement for third parties, the original version for customers also required revisions. "We have incorporated many of our customers' comments, and the new contract is now in final review by the audit committee," adds Vree.

More than a year after the first draft of a new contract was presented to the FundSERV board, it is now expected that signing will commence in April 2004 following board approval of the final revisions. Vree says, "We consulted extensively with our customers, because we wanted to do it right."

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