The working group formed by the funds industry to respond to the regulator’s criticism about its use of outsourcing has published the outcome of its review.
In December 2012, the Financial Services Authority, as it was then, wrote to asset managers to highlight its concerns about their oversight of outsourced services and their resilience in the event of any provider’s failure.
In response an Outsourcing Working Group was formed – comprising fund groups, service providers and the Investment Management Association – which has now issued ‘guiding principles’ on outsourcing. These address three themes: oversight, exit planning, and standardisation.
‘As there are many types of outsourced relationships, we have specifically refrained from producing a checklist, as we recognise each firm has a bespoke business model,’ the working group stated.
The group has suggested that asset management firms now review their outsourcing agreements with reference to the guiding principles, and noted that the regulator is likely to revisit their arrangements.