Outsourcing and Oversight


Outsourcing & Oversight

Nearly three years on from the FCA’s Thematic Review of Outsourcing in the Asset Management Industry (TR 13/10, November 2013) are we seeing fundamental change in how investment firms consider outsourcing?

In simple terms, no. The trend towards outsourcing continues - with the rollover of existing contracts, consolidation to fewer strategic suppliers, new outsourcing mandates being awarded, and firms continuing to consider further extensions to services - and first time outsourcings. The business rationale can still be compelling - from enabling global expansion, through avoiding expensive technology re-investment, to sharpening focus on business propositions and improving profitability.

 Yet at the same time the regulatory challenge facing investment firms continues to grow - whether fund related (AIFMD, UCITSV, RDR etc) or investment related (EMIR, MiFID2 etc). In an outsourced operating environment this places particular challenge on ensuring the completeness and effectiveness of oversight of the supplier and on the clarity of roles and responsibilities - not only in delivering the end-to-end service model but in ensuring full regulatory compliance.

 While we evidenced a flurry of activity post the Thematic Review and many firms addressed the challenges identified, the oversight hurdle has been raised. Not all firms - especially in sectors that are becoming subject to increased regulation - are raising their game accordingly. Will this prompt another Dear CEO on outsourcing? 

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James Hockley

James is a management consultant for Knadel specialising in strategic business change with a particular focus on the development and delivery of global operating models and outsourcing. James has more than 25 years financial services experience with proven success in business management, implementing strategic change and improving business performance.

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