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Asset managers and outsourced activities: What other industries can learn
As more firms outsource parts of their back and middle-office functions, care must be taken not to outsource the responsibility for these activities. In December 2012, the UK asset management industry was taken by surprise when a ‘Dear CEO’ letter from the regulator was sent to 125 asset managers. All others across the industry were warned to take notice of this letter. Although no attestation of compliance with European rules on outsourcing was required by the UK regulator, asset managers were asked to consider the contents of the letter and those concerns raised by the regulator. A working group was formed in conjunction with the Investment Management Association (IMA) and five months later a much wider industry working group was created that included those who were carrying out the servicing of outsourced activities (service providers, often part of global banks) and the Big Four consulting firms. Although the focus has been on asset managers in relation to outsourcing, it would not be difficult for the UK regulator to ask other areas of the financial services industry the same questions about their governance of outsourced activities.
The full article is available to subscribers to the journal.
Susan Wright is a Regulatory & Compliance Specialist at the Investment Association, specialising in Client Money and Assets, Conduct of Business Sourcebook, Senior Management Arrangements, Systems and Controls (SYSC rules), and related governance and prudential issues. Prior to joining the association, she held the position of Head of Regulatory Management at an asset management company after a career in the public sector. Susan is a Chartered Member of the Securities Institute and acts as an External Specialist at the Chartered Institute for Securities & Investment. The Investment Association represents UK investment managers and has over 200 members who manage more than £5trn for clients around the world, helping them to achieve their financial goals. The association’s aim is to make investment better for clients, companies and the economy so that everyone prospers.