Asset managers and outsourced activities: What other industries can learn

Susan Wright

Journal of Securities Operations & Custody, 2015, vol. 7, issue 3, 196-203

Abstract: 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.

Keywords: outsourcing; exit plans; standardisation; outsourcer oversight; outsourcing working group (OWG); Dear CEO letter; governance (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2015
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