Regulatory Roundup 51 contained an article on the FCA’s recent thematic report on outsourcing in the asset management industry. Two key findings were inadequate oversight and inadequate contingency plans to deal with the failure of an outsource provider. Mention was also made of the formation of the Outsourcing Working Group (OWG) to establish guiding principles.
The OWG has published its response to the FCA’s paper (see link).
The OWG received several mentions in the FCA paper including “asset managers should consider adopting the guiding principles on exit planning proposed by the OWG where appropriate” so it could well be that the regulator will use the publication as a benchmark when judging a firm’s approach to outsourcing. Given this we would recommend that firms that do outsource, and asset management firms in particular, review the OWG paper – which includes a sample exit plan – to assist in the identification of any gaps or weaknesses.