Having the right support in place helps firms to manage the regulatory risk within their firm and helps to ensure suitable client outcomes. Support can be outsourced to assist with compliance reporting, education and pre and post-sale evaluations.
Training and development
Keeping track of regulatory requirements may seem overwhelming, but there are many options available in the market to help ensure individuals within your firm having access to suitable training material and qualified personnel.
For firms that don’t have sufficient qualified trainers, it’s vital individuals have access to suitable resources to help them meet their own continuing professional development (CPD) obligations.
Business processes and HR
Outsourcing activities such as recruitment, payroll and administrational services gives you access to specialist skills and systems. In most cases, you only pay when you need to use these services.
Sales and marketing
Nowadays, many organisations use a consultant or an agency to handle marketing communications due to the costs involved. Smaller businesses, or those in specialised markets, can also outsource sales to specialist agencies.
Areas to consider before you outsource
Before entering into any outsourcing arrangement with a third-party service provider it is important for any business to undertake appropriate due diligence and ask the right questions.
For an FCA-regulated firm it is critical to fully understand the regulatory and operational risks associated with the services you are looking to outsource, as there are specific FCA requirements in this area.
It is vital for a firm to develop and maintain an effective governance and risk-management framework, particularly considering recent FCA thematic reviews.
Outsourcing of functions does not relieve your firm of its regulatory responsibilities, and you should retain appropriate competence and expertise in these areas in-house to maintain effective oversight and operational resilience.
Before entering into any outsourcing arrangement with a third-party we recommend you consider the following:
1. Is outsourcing appropriate and/or necessary for your business?
Effective outsourcing should lead to lower expenses, increase in productivity and greater profits.
If the function being outsourced is something your firm could already undertake, you should consider whether it would be more cost-effective, or indeed effective, to keep that function internal by hiring additional staff.
2. Will outsourcing this function be in your client’s best interests?
Occasionally a third-party service provider cannot deliver as expected, or meet your agreed criteria and expectations. In this instance, it is worth shopping around to find the right third party to meet your firm's specific needs.
Effective oversight is crucial for success, and you should continuously question who you outsource to, why, and demonstrate why they are remain a good fit for your business and clients.
3. Operational resilience
The FCA expects all regulated firms to be operationally resilient. This includes dependencies on third parties.
As part of your outsourcing requirements you must have a comprehensive understanding and mapping of the people, processes, technology, facilities and information necessary to deliver each service.