Joint Forum releases outsourcing guidance for financial services

The Joint Forum has released a report examining trends in outsourcing in the financial sector. ‘Outsourcing in Financial Services’ spells out the potential risks that outsourcing activities can pose to financial sector firms, while recognising the substantial benefits that outsourcing can provide. To assist firms and regulators in considering their outsourcing activities, the report presents a set of principles outlining issues that should be taken into account in the process.

The principles focus on establishing coherent policy and risk management programmes for outsourcing activities and recognising that a firm's senior management remains responsible for activities that are outsourced. Issues for consideration in drawing up contracts and contingency planning are also discussed. Finally, the report contains some broad principles to help supervisors take outsourcing into account in their regular risk reviews of firms.

The publication follows a consultation process during which banking, insurance and securities firms, regulators and the public have had the opportunity to comment on outsourcing principles outlined in an earlier draft of the report.

In developing the outsourcing principles, the Joint Forum worked closely with the International Organization of Securities Commissions (IOSCO), which has also released a report on outsourcing. The two organisations have collaborated to ensure that their complementary sets of principles are consistent. The Joint Forum’s principles are high-level and aimed collectively at the banking, insurance and securities sectors. They are designed to provide a benchmark against which all financial institutions can gauge their approach to outsourcing. IOSCO’s principles are designed specifically for securities firms.

The Joint Forum was established in 1996 under the aegis of the Basel Committee on Banking Supervision, IOSCO and the IAIS to deal with issues common to the banking, securities and insurance sectors.

Download Joint Forum guidance

•Date: 21st February 2005 • Region: World •Type: Article •Topic: Financial sector BC
Rate this article or make a comment - click here