CTRL 8.2.2 Due skill in material outsourcing arrangements

(1) The senior management of an authorised firm must exercise due skill, care and diligence in selecting, entering into, managing and exiting from a material outsourcing arrangement.
(2) Before entering into a material outsourcing arrangement, the senior management:
(a) must assess the risks that the outsourcing poses to the firm’s business; and
(b) must satisfy themselves that the service provider selected has the ability and capacity to perform the relevant function reliably and professionally at the start and during the life cycle of the outsourcing.
(3) For this rule, the senior management must take into account at least the following matters:
(a) whether the service provider is regulated, to what extent, and by whom;
(b) whether the function is subject to specific regulation or supervision;
(c) the risk that the service provider’s service may become unavailable because of the number of other persons using the service provider;
(d) the financial stability and expertise of the service provider;
(e) any conflict of interest that might arise from the provision of the function by the service provider.

 

Derived from QFCRA RM/2020-4 (as from 1st July 2021)