Date Published: 1 April 2015
The Monetary Authority of Singapore (“MAS”) first issued the Guidelines on Outsourcing (“Guidelines”), about ten years ago. Since then, outsourcing arrangements have become more prevalent and increasingly complex. To deal with the new challenges, MAS proposed revisions to the Guidelines in September 2014 to raise the standards of institutions’ risk management practices.
The proposed revisions to the Guidelines provide guidance on sound practices that relate to a wide range of issues, including responsibilities of boards and senior management and monitoring and control of outsourcing arrangements. These changes underscore the need for financial institutions to adopt an institution-wide, responsive and rigorous approach towards management of outsourcing arrangements. In addition to these, the proposed revisions include significant changes made in the following areas:
Notice on Outsourcing
Further, MAS proposes that all institutions looking to enter into Material Outsourcing Arrangements have to issue a Notice (“Notice”) that defines a set of minimum standards for outsourcing management. The Notice sets out requirements for the assessment of service providers, protection of customer data, termination of and exiting from an outsourcing arrangement and outsourcing to overseas regulated financial institutions. The expectation is for an institution to manage outsourcing arrangements as if the services continue to be conducted by the institution. Most importantly, the Notice, unlike the guidelines is legally-binding and that the institutions must abide by it.
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Disclaimer: This update is provided to you for general information and should not be relied upon as legal advice.
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