Belgium: How to comply with the FSMA’s new outsourcing handbook

By neub9
2 Min Read

The Belgian Financial Services and Markets Authority (FSMA) has created a new handbook on outsourcing for UCITS management companies, alternative investment fund managers (AIFMs), and portfolio management and investment advice companies collectively referred to as “In-Scope Entities”. This handbook replaces the old Circular PPB 2004/5 and sets out principles of sound management for the outsourcing of functions.

In-Scope Entities must align their current outsourcing arrangements, policies, and practices with the new handbook by June 2024. The handbook provides guidance on various aspects such as the proportionality principle, critical or important functions, intra-group outsourcing, drafting outsourcing agreements, and establishing an outsourcing register.

Key Takeaways:
– Consider the proportionality principle
– Distinguish between critical or important functions and other functions
– Avoid creating empty shell constructions
– Apply the rules to intra-group outsourcing
– Review and update outsourcing policies and procedures
– Establish an outsourcing register
– Consider the FSMA’s checklist when drafting outsourcing agreements
– Notify the FSMA when outsourcing critical or important functions

In applying the proportionality principle, In-Scope Entities must consider the complexity of their outsourced functions and the potential impact of outsourcing on their activities. They must also differentiate between critical or important functions and other functions, with more stringent rules applying to the former. In addition, In-Scope Entities must avoid creating empty shell constructions and ensure that the rules are also applicable in an intra-group context.

The handbook also provides detailed guidance on drafting outsourcing agreements, including the required clauses that must be included, and the necessity to inform the FSMA in advance when outsourcing critical or important functions.

Overall, In-Scope Entities must review their current outsourcing frameworks, policies, and procedures to ensure compliance with the new guidance from the FSMA. Failure to do so by June 2024 may result in non-compliance with the new outsourcing regulations.

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