COLL 8.5.6 Outsourcing Management—All QFC Schemes

(1) The operator and independent entity of a QFC scheme must exercise appropriate skill, care and diligence in selecting, entering into and exiting from outsourcings by them under this part.
(2) The operator or independent entity must ensure that—
(a) 1 or more senior managers approve and periodically review its policy and procedures for functions outsourced under this part, including its procedures for the following:
(i) the assessment of feasibility;
(ii) the assessment of risk;
(iii) the assessment of impact on its functions;
(iv) the costing of outsourcings;
(v) the criteria for selecting service providers; and

Note Senior manager is defined in the glossary.
(b) every service provider has the ability and capacity to exercise reliably and professionally the functions to be outsourced to the service provider, both at the start of the outsourcing and throughout its life cycle, having regard, for example, to—
(i) whether the service provider is regulated, to what extent and by whom; and
(ii) whether the exercise of the outsourced functions is subject to specific regulation or supervision; and
(iii) the risk that outsourced functions are not properly exercised because of the number of other persons using the service provider; and
(iv) the financial stability and expertise of the service provider; and
(v) potential conflicts of interest that may arise in relation to the outsourced functions.
(3) The operator or independent entity must ensure that it has a comprehensive contingency arrangement to allow business continuity if there is a significant loss of services from the service provider, including an exit strategy and, if appropriate, partial exit and step-in clauses.
(4) The contingency arrangement must cover, among other things, the following:
(a) a significant loss of resources by the service provider;
(b) financial failure of the service provider;
(c) an unexpected termination of the outsourcing.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)