Financial services outsourcing firm Vital Business Partners (VBP) has called on financial advice businesses to review their offshore outsourcing arrangements following ASIC’s recent review into the use of overseas service providers.
The regulator’s year-long review found wide variations in how financial services entities manage the risks of offshore outsourcing, including gaps in governance and information security.
See: ASIC Puts Firms on Notice Over Offshore Outsourcing Risks
ASIC warned that licensees and advisers face “critical risks” from loss of control over key functions, service disruptions, and potential conflicts created by foreign laws. It urged advice firms to regularly assess the performance and suitability of their outsourcing providers.
Now, VBP has released an 18-page guide outlining steps advice businesses could take to strengthen governance and meet their legal obligations when outsourcing.
VBP’s CEO Nathan Jacobsen said the ASIC report underlined the differing levels of compliance and oversight across the industry.
“It is in the best interests of consumers, advisers and the broader industry that all parties involved in the provision of advice, including suppliers and contractors, operate with a continuous focus on improving information security practices,” he said.
“The risks are only rising, guaranteeing further regulatory scrutiny, and possibly intervention, if the industry cannot effectively and proactively manage these risks.”
Click here to download the full report.
