The FSA has warned firms that outsourcing functions is not synonymous with outsourcing potential lia...
The FSA has warned firms that outsourcing functions is not synonymous with outsourcing potential liabilities.
Policy adviser Simon Ashby said a strong initial contract and ongoing partnership are both vital components of a successful outsourcing deal.
The current regulatory stance with regard to outsourcing is in a guidance capacity rather than actual rules and Ashby said the FSA has no desire to become more prescriptive in this area as things stand. While prepared to leave it to individual companies to oversee their own outsourcing agreements, the regulator feels the general situation needs to improve in order to prevent any future controversy.
'Our basic advice to companies setting up any sort of outsourcing agreement, ranging from back-office support to fund management, is to get a good contract in place that includes an adequate service level agreement and termination rights,' he said.
'We have also found that once a company outsources an element of its business, many tend to leave everything to the outsource service provider rather than working as partners to get the best from the arrangement.'
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