Directory Image
This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Privacy Policy.

Outsourcing guidelines in Hong Kong

Author: James Smith
by James Smith
Posted: Mar 12, 2015

Outsourcing is the something that can be interpreted as process through which the regulated financial services enterprise signs a contract with a company (that can be termed as the service provider) according to which the company has to perform various facets of the outsourcing party’s functions on its behalf. It’s not that the outsourcing party is incompetent to perform these functions. The main reason behind allocating this workload to a third party is cost cutting. Outsourcing gradually has developed into a potent cost cutting measure for various companies across the world. It is also deployed as a strategy to gain abilities that they don’t possess or nourish their present strengths.

The SFC Hong Kong hasn’t stated any particular guidelines on outsourcing. Nevertheless, in a press release that dates back to 16th of February, 2005, a SFC Hong Kong spokesperson declared the Principles in regard to Outsourcing of Financial Services for Market conciliators. These principles were stated as an effort to create a valid framework that will provide able assistance to regulated organizations in discerning the measures they should resort to while considering outsourcing options.

These principles lay emphasis on the significance of bona fide assiduousness while the selection and surveillance of the company providing the service to the outsourcing party. They also advocate specific provisions that should be incorporated while drafting the contract with the service provider. They also accentuate the need to make certain that there are procedures to provide the necessary shield to IT security, safeguard client confidentiality, and retain business progression. As much as it may seem, these principles are not favorably disposed towards the outsourcing entity. They also emphasize on according the right for the regulator and the service provider to acquire and examine records at will.

It is imperative to keep in mind that the outsourcing enterprise and its administration retains comprehensive legal accountability towards its clients pertaining to all functions which the enterprise may outsource to a third business entity, in a similar way as if these functions were executed in the enterprise itself. In the cases that have come up in the recent times the SFC licensing applicant has proclaimed that particular aspects of a business, chiefly technical and operational will be outsourced to either an external service provider or an internal party. The SFC Hong Kong has formally requested the applicant to give an official agreement, in favour of SFC, that it will adhere to the guidelines provided to them in regards to the outsourcing that it is aiming to affix.

About the Author

If you want to get a startup or a well-established corporate registered here, then you must have countless questions in mind. This section explains a few of the commonly asked questions related to companies registry in Hong Kong.

Rate this Article
Leave a Comment
Author Thumbnail
I Agree:
Comment 
Pictures
Author: James Smith

James Smith

Member since: Feb 12, 2015
Published articles: 11

Related Articles