On 29 November 2019, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) published a sector letter for investment firms and investment funds to inform them of the most important signals that followed from the AFM’s investigation into outsourcing.
As part of its investigation, which took place between October 2018 and May 2019, the AFM asked nearly 300 investment firms, managers of alternative investment funds and managers of UCITS to complete a questionnaire. The purpose of the investigation was to gain insight into the activities carried out by third parties for the aforementioned financial institutions and to form a picture of the extent to which they have taken control measures based on the applicable outsourcing rules.
The letter sets out the sector wide insights that the AFM has gained from the investigation and should provide investment firms, managers of alternative investment funds and managers of UCITS with tools to better manage outsourcing risks. The letter comprises seven sections covering the:
- background of the investigation and the purpose of the letter;
- importance of the letter for investment firms, managers of alternative investment funds and managers of UCITS;
- insights gained from the investigation;
- legal framework applicable to outsourcing;
- process determining whether services or activities are being outsourced;
- points of attention relating to the outsourcing rules (e.g. identifying outsourcing risks, having an adequate outsourcing policy and selection procedure, adequately recording rights and obligations in an outsourcing agreement, etc.); and
- the future with the AFM emphasising that it will be increasing its focus on outsourcing.
View the sector letter (Dutch only), 29 November 2019.