On 1 March 2017 the Jersey Financial Services Commission published the final text of its amended Outsourcing Policy.

• http://bit.ly/2lNMKgL

Although many of the principles in the revised Outsourcing Policy are similar to those in the existing Outsourcing Policy, some amendments within the body of the new document and should be considered carefully.

IMPORTANT TO NOTE – The modified outsourcing policy will:

1. Take effect from 1 June 2017 for new outsourcing arrangements.
2. Apply to all existing outsourcing arrangements from 1 June 2018.

THE KEY CHANGES adopted through the amended Outsourcing Policy in COMSURES view is:

1. Expanding the scope of the current Outsourcing Policy, TO ALSO CAPTURE
   1. ACTIVITY WHICH IS NOT IN ITSELF REGULATED but
   2. which WOULD HAVE A MATERIAL IMPACT on the outsourcer’s regulated operations if it was not performed to an appropriate standard;
   3. Against this most important change – I would draw your attention to a Comsure posting about your use of IT cloud (and similar) services: http://bit.ly/2lNxWic

OTHER KEY CHANGES adopted through the amended Outsourcing Policy include:

1. introducing a particular process for notifying the JFSC of proposed outsourcing arrangements;
2. aligning the core principles with international standards; and
3. providing additional guidance and FAQs.

Shown below are some specifics  

All registered persons:

For all other registered persons to whom the Outsourcing Policy applies, the amended Outsourcing Policy is also helpful since it includes an express list of activities which are not subject to the amended Outsourcing Policy, such as:

1. advisory services which do not form part of the registered person’s regulated activities; and
2. arrangements between different parts of the same legal entity (such as between branches).

Fund specific

For Jersey registered collective investment funds and fund services businesses, including:

1. the removal of the distinction between outsourcing and delegation;
2. the exclusion of collective investment funds from the amended Outsourcing Policy provided that certain disclosure conditions be met; and
3. the carve-out of certain types of fund services activity, including the provision of investment advisory services and MoME arrangements.

What do you need to do?

If you are a Jersey registered Collective Investment Fund:

1. You will need to consider whether any additional disclosures should be made to your investors as contemplated by the amended Outsourcing Policy and,
2. If so, how best to approach that communication in line with the guidance provided in the amended Outsourcing Policy.

New arrangements        

1. Will be subject to the amended Outsourcing Policy from 1 June 2017.

Existing arrangements 

1. Must comply with the amended Outsourcing Policy no later than 1 June 2018.
2. As part of the next annual review process, consider whether these would be compliant with the amended Outsourcing Policy.

New arrangements now in scope

1. Previously out of scope arrangements (which will now be caught by the amended Outsourcing Policy) must comply with the amended Outsourcing Policy no later than 1 June 2018.
2. It is likely that changes will need to be made to the text of these agreements, in addition to implementing additional internal governance measures.

Policies and procedures              

You should also consider what updates need to be made to existing policies and procedures to reflect the requirements of Policies and procedure

1. You should amend policy and procedures and ensure that change control procedures can be invoked,
2. Provide sufficient time to complete the JFSC’s new Outsourcing Notification process.

Governance

1. For all outsourcing arrangements which are caught by the revised Outsourcing Policy, additional internal management measures are likely to be required.

As ever Comsure would be pleased to assist you and your business with any queries that you may have regarding the scope and implementation of the amended Outsourcing Policy.