Will there be higher risk hurdles to cross for outsourcing outside the European Economic Area, the EU States plus Switzerland, Norway and Liechtenstein (“EEA”)?
• In the UK the publication of a cost/benefit analysis of the impact of MiFID is required under The Financial Services and Markets Act 2000. Background to outsourcing under MiFID Article 13(5) of MiFID states: “An investment firm shall ensure, when relying on a third party for the performance of operational functions which are critical for the provision of continuous and satisfactory service to clients and the performance of investment activities on a continuous basis, that it takes reasonable steps to avoid undue additional operational risk. Outsourcing of operational functions may not be undertaken in such a way as to impair materially the quality of its internal control and the ability of the supervisor to monitor the firm’s compliance with all obligations.” The FSA has for some time been developing its principles and policies for operational risk in the context of outsourcing. Their implementation in the UK has been delayed because of the forthcoming changes to be introduced under
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