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Firms advised to consider exit plans
12 February 2014
Outsourcing professionals also discuss oversight and standardisation with Outsourcing Working Group, says Hardeep Dhillon
Outsourcing Working Group
Investment Management Association
Following the release of the Outsourcing Working Group (OWG)
report on December 9 2013, an industry event was held on
January 24 where members of the OWG, asset managers,
consultants and service providers as well as representatives
from the Financial Conduct Authority (FCA) convened to discuss
the report’s findings.
The OWG report outlined guiding principles and considerations
that asset management firms should take into account depending
on the nature, size and scope of their outsourced arrangements.
The OWG was split into three work streams focusing on
oversight, exit planning and standardisation.
General consensus was that the majority of the principles were
achievable and that asset managers needed to digest the
principles and how they would implement them, said Susan
Wright, senior regulatory adviser at the Investment Management
"Having the FCA attend was very useful as it gave the attendees
an opportunity to ask any questions after having seen the
report," said Wright. "One of the key points to emerge from the
update meeting was confirmation from the FCA that if a service
provider fails on a Friday the asset manager must implement its
exit plan on the Monday morning."
Wright said that firms will need to consider exit plans with
each of their service providers as well as oversight
procedures. "The FCA expects firms to have or be drawing up
some sort of exit plan, have a compliance monitoring plan
showing oversight of that provider and then really be engaged
with their service providers to consider the standardisation
principles," she explained.
She added that the FCA does not intend to undertake another
thematic review of outsourced activities, instead, the FCA will
ask several questions on outsourced activity when they visit
firms during their normal supervisory visits.
"If firms provide answers that satisfy the FCA, then you could
argue that the OWG has done its work, but if there are
unsatisfactory answers then it is quite possible that more
would need to be done. I hope it is the former," she said. "An
OWG steering group is expected to re-convene in six
months’ time to discuss any trends across the
industry and liaise with the regulator.