Outsourcing: Is it harnessing specialists or is it a cop out?
First Financial Advisers are an IFA firm whose associated company offers an outsourced compliance function to IFA firms who require that extra specialist knowledge. Whilst many companies are unsure as to whether they should outsource elements of their business there are a number of rules to follow to ensure you work with a specialist.
Whilst the regulators are happy for IFA firms to outsource certain business requirements, such as preparation of accounts, they are nervous that oursourcing compliance might indicate a lack of commitment by the firm. They also recommend that firms should undergo a comprehensive due diligence process before outsourcing major work. So how can an IFA outsource effectively?
In principle it makes sense to outsource compliance and income reconciliation to a specialist – just as much as it makes sense to engage and accountant. But you need to plan it carefully and don’t just fall into a loose, casual arrangement.
- Be very clear on what service you wish to outsource and what expertise an outsourcing company has to offer. Draw up a short brief and ensure you get buy-in from relevant internal staff
- Obtain a proposal from the appropriate providers. Make sure the proposal document specifies what service is both in and out of scope and ask for details if you are unsure. Don’t be afraid to ask for jargon to be explained
- Meet with the shortlisted firms – don’t just go for the cheapest
- Ask to speak to a reference site to understand the services they offer
- Make sure that the tender covers service standards (i.e turnaround times); what happens if things go wrong; data protection and data security; back-ups and disaster recovery. The relevant companies should have a checklist for ‘due diligence pack’
- Be clear about who, in your organisation, will manage the relationship and give them the time and authority to do it. They must have the knowledge and skills to oversee the chosen companies work (or at least identify the areas where the knowledge is weak)
- Agree the reporting arrangements and keep on top of them to ensure they deliver as agreed
- Don’t be afraid to meet your Relationship Manager to discuss any issues with service you may be experiencing
Outsourcing is definitely NOT a cop out and by harnessing the experience of specialist companies it gives you access to expertise, reduction in risk and cost control.
If you would like to discuss how The First Financial Consultancy can help with your compliance requirements, contact them on 01635 35071 or email email@example.com