Oversight in an Outsourced Environment
Oversight in an Outsourced Environment
Last year the FCA published its Thematic Project Findings Report on outsourcing in the asset management industry. Much of the focus was on oversight of the outsourced provider and the level of expertise of staff employed in this function. The FCA reminded CEO’s of the requirements of the SYSC rules to ensure that they employ staff of the necessary expertise to oversee service providers. Asset managers will also consider the reputational risk to their brand of an under-performing service provider.
The report quoted an example of an asset manager who had outsourced fund accounting services, employing a senior employee with substantial experience of fund accounting backed by a well resourced team. This was an example of effective oversight, although there is a fear that outsourcing can create a knowledge gap where senior management do not have the depth of knowledge to monitor the activities of the third party administrator.
The FCA has promised to monitor progress in the industry to ensure that asset managers are complying with their outsourcing obligations, with the FCA prepared to consider further policy action if necessary.
This attention to the importance of oversight creates potential opportunities in the job market for funds industry practitioners. In the funds industry, oversight specialists will tend to have expertise in Transfer Agency, Fund Accounting or a mix of the two combined with strong regulatory knowledge.
If you would like to discuss recruitment of an oversight specialist or are looking for an oversight role, please contact Steve Johnson on 01277 263578.