8 Outsourcing policy

The management body should approve and regularly review and update the outsourcing policy of an institution, ensuring that appropriate changes are implemented in a timely manner.

The outsourcing policy should consider the impact of outsourcing on an institution’s business and the risks it faces (such as operational risks, including legal and IT risks; reputational risks; and concentration risks). The policy should include the reporting and monitoring arrangements to be implemented from inception to the end of an outsourcing agreement (including drawing up the business case for outsourcing, entering into an outsourcing contract, the implementation of the contract to its expiry, contingency plans and exit strategies). An institution remains fully responsible for all outsourced services and activities and management decisions arising from them. Accordingly, the outsourcing policy should make it clear that outsourcing does not relieve the institution of its regulatory obligations and its responsibilities to its customers.

The policy should state that outsourcing arrangements should not hinder effective on-site or off-site supervision of the institution and should not contravene any supervisory restrictions on services and activities. The policy should also cover intragroup outsourcing (i.e. services provided by a separate legal entity within an institution’s group) and take into account any specific group circumstances.