Outsourcing, with FCA compliance

In the recent publishing of FCA Handbook SYSC, Chapter 8.1 has reminded senior managers of their regulatory accountabilities and responsibilities when outsourcing functions such as the back-office. With over one in five banks and brokers outsourcing their entire back office function and 86 percent of the sector doing so to some degree, according to the latest research from YouGov and BNP Paribas Securities Services, the scale of the compliance challenge is clear.

This obviously puts pressure on outsourced service providers and senior managers in regulated organisations to deliver such compliance. They now have the chance to acquire the ability to mitigate risk and help evidence compliance, with the latest launch of eg solutions’ software suite.

“To satisfy the requirements of the FCA Handbook SYSC Chapter 8.1, senior managers need to be able to demonstrate that undue risk is not created when outsourcing, off-shoring or near-shoring and adequate systems of control are implemented and maintained,” said Elizabeth Gooch, Acting Chief Executive of eg solutions. “Access to data and visibility of all activity must be readily available to senior managers who have responsibility and accountability for operations,”

“Organisations performing customer servicing and back office operations – often over multiple locations, time zones and international territories – must demonstrate that adequate controls are maintained by the organisation itself and any third party agency,” she added.

“In other words Chapter 8.1 of the FCA Handbook clearly states the case that while you can outsource your back office, accountability and compliance remains firmly in-house. For some financial services organisations this has meant physical visits to offshore teams which is a costly use of management time and is also a very ad-hoc approach. The challenge therefore has to be to find a solution that will address these requirements head-on, providing full visibility and transparency cost effectively”

eg’s software enables real-time and post event visibility of all activities regardless of location, time-zone or territory.  It captures work item information from all sources to provide a single, consistent, referenceable and auditable insight into all activity throughout all back office operations, wherever they are.

It provides the ability to monitor activity at enterprise, site location, team and individual level.  Real-time and historic reporting provides for robust review, scrutiny and management of every activity as well as managing Service Level Agreements with third party outsourcers.

Both the outsourced service provider and the regulated organisation are able to monitor work, providing multiple check points (4,6,8 ‘eye’ verification) and comprehensive audit trails on all factors of process activity.

Skills-based work allocation functionality and controls ensure that work is completed by individuals with appropriate competencies and delegated authorities improving quality, reducing error potential and mitigating additional risk.

“The eg operational intelligence software suite was the first purpose built back office workforce optimisation software product on the market,” Gooch said. “It was designed to solve real problems experienced by our customers who need to balance customer service and compliance requirements whilst also running their businesses cost effectively. We have been constantly refining our software to incorporate both the developing requirements of our end users as well as the strategic needs of our customers.  The ability to be able to mitigate operational risk and help evidence compliance has been at the heart of our solutions for financial services companies from the beginning. Those now faced with the challenge of addressing Chapter 8.1 have a tried and tested answer that will satisfy its requirements in terms of accountability and responsibility.”