To outsource or not to outsource, that is the question

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Chief Compliance Officers (CCOs) and compliance teams face mounting pressure as heightened levels of global regulation combine with increasing scrutiny and cost concerns. Over-burdened teams that are stretched too thinly are more likely to experience burnout and make mistakes, exposing firms to risk. This is where a pragmatic approach to outsourcing can help ease some of the burden, improve efficiency and could be a cost saving.

The appeal of outsourcing has remained consistent with the number of firms choosing to work with external partners for compliance ranging between 24 per cent and 28 per cent, year-on-year since 2016, according to the 2019 Thomson Reuters Cost of Compliance report. This paper shows over a third (36 per cent) of global financial services firms now outsource all or part of their compliance function.

Further research shows compliance teams are feeling the pressure - almost half of surveyed CCOs (48 per cent) perform more than one role, as shown in the IAA/ACA’s 2019 Investment Management Compliance Testing Survey. Also, the ACA 2019 Alternative Fund Manager Survey finds 16 per cent of surveyed firms saw compliance personnel go on extended leave within the last year.

Outsourcing can relieve some of this load while allowing internal compliance teams to maintain final oversight.

A 'co-sourcing' approach can come into play to help achieve this. It would involve a long-term one-to-one business collaboration with a trusted provider where both partners have a vested interest in the outcome of the relationship. Such a collaborative approach allows the service provider to support a firm and its compliance activities in a better, quicker, and often cheaper, way without increasing exposure to regulatory risk.

Having an outsourcing agreement in place can also allow firms to tap into a large pool of compliance professionals on a contracted basis to work in-house. This can be particularly beneficial during busy periods.

Working with an external, professional compliance consultant can support firms in their efforts to keep abreast of regulatory change. These consultants are constantly scanning the regulatory horizon to maintain their own competency and preserve their ability to work with a wide range of firms. As a result, they are able to create efficiencies leveraged from their experience.

Ultimately, turning to a professional consultancy firm for governance, risk and compliance support allows firms to focus on their core business, while reducing risk and improving standards. This model creates operational efficiencies, which in turn can bring about cost savings.

Solutions on offer

ACA Compliance Group helps thousands of firms globally mitigate regulatory, operational and reputational risks inherent in their business functions through a range of solutions. These include outsourcing/co-sourcing services, in-sourcing. secondment services and retained support.

The firm’s UK Analysis and Review centre has a dedicated team whose members can help reduce the workload of COOs and in-house compliance teams. Services include Financial Promotions, Marketing and Advertising Reviews, Expert Network Chaperoning and Electronic Communications Reviews (E-Comms).

ACA’s in-sourcing or secondment facility can provide firms with additional personnel during periods of stress – for example if a member of staff is out on maternity or medical leave.

Further, if looking for retained support, the firm’s compliance team is made up of specialists drawn from global regulators, financial institutions and advisory firms. Therefore, ACA’s Comprehensive Customised Compliance (C3) retained service provides clients with core regulatory compliance assistance with ongoing support to ensure their compliance programmes are up to date and effective.

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