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Outsourcing Remediation: Multi-National Bank

Client challenge

  • An inherited outsourcing policy statement from an overseas Head Office had led to insufficient rigour towards Material Outsource arrangements.
  • The client needed assistance in identifying which third party services could be deemed Material Outsource provisions by the Regulator.
  • It was anticipated that many of the agreements would not be of sufficiently robust calibre to provide adequate SYSC8 oversight and controls.
  • Once supply arrangements were identified and contract health reviews complete against SYSC8 requirements, the client knew that they did not have sufficient bandwidth and skill capability to commence Material Outsource contract remediation.
  • The client carries out Financial Services activities with the UK regulated by the FCA and PRA. The FCA Handbook requires that the entity must take reasonable care to organise and control its affairs responsibly and effectively. A firm's outsourcing arrangements must meet the requirements set out in SYSC 8.
  • The overall aim of these obligations is to ensure that each regulated firm remains appropriately managed, especially in terms of the operational risk that derives from the use of outsourced services, and that contracts and controls are appropriately robust.

What we did

  • TORI undertook an analysis to understand the current outsourcing maturity of the client, that lead to collating and identifying all material contracts within the organisation.
  • A review of all available contracts and of the outsourcing policy was undertaken, with a matrix being produced - identifying elements of non-compliance against Group Policy and SYSC 8 across all material UK-based contracts.
  • Recommendations were put forward to the client: which suppliers fit the suitability criteria and which were in need of remediation to comply with Group Policy & SYSC 8.
  • TORI developed a remediation process and recommended a timetable for delivery.
  • TORI engaged with the Material Service providers to remediate contracts. We began negotiations and incorporated any improvement opportunities into the final process to be transitioned to the Business As Usual (BAU) team.
  • An existing Master Services Agreement (MSA) between the UK entity and Head Office was reviewed, resulting in a new MSA being completed that is compliant with SYSC 8.

The result

  • The client achieved compliance with Group policy, an enhanced UK Policy and SYSC 8 regulation of all applicable material UK-based contracts.
  • A comprehensive MSA between the UK entity and Group Head Office was produced and implemented.
  • TORI SME’s provided training and guidelines to the client to assist with BAU, ongoing remediation of material contracts and continuing compliance with SYSC 8.
  • A clearer and more comprehensive relationship between the UK and Group was established due to support and remediation of OLAs.
  • A review of the current Procurement Policies for both SYSC 8 control completeness and operational efficiency was undertaken. TORI refined the policy and created a procurement code and guidelines for the client.
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