Following on from the Australia Securities & Investments Commission’s (ASIC) Report 482 Compliance Review of the Retail OTC Derivative Sector, ASIC has increased its scrutiny on Australian Financial Services Licence (AFSL) Holder’s outsourcing arrangements. ASIC expects that AFSL Holders have documented legal agreements in place with all external service providers connected with the provision of financial services.
ASIC has clarified that where AFSL Holder’s outsource any functions that are material to the provision of financial services, formal legal agreements should be in place that document the provision of service and the terms of the agreement between the two parties. This is especially important where AFSL Holders engage the services of related entities based overseas.
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