Jersey: The Jersey Financial Services Commission - The Revised Outsourcing Policy Issued 1 March 2017

Last Updated: 5 April 2017
Article by Matthew Shaxson and Tara Kapur

Overview: the revised Outsourcing Policy (the Policy)

The Policy published by the Jersey Financial Services Commission (the JFSC) on 1 March 2017 achieves much by doing away with the distinction between delegation and outsourcing which has historically been a source of confusion for registered persons conducting financial services business in Jersey.

However it has added an extra layer of regulatory burden on registered persons and non-regulated entities alike by broadening the definition of outsourced activity to capture activity which in itself is not regulated activity but by virtue of its ability to materially impact the provision of services for which the registered person is licenced falls within the realm of activity that will henceforth be covered by the Policy.

Effective Dates

The Policy has been published on 1 March 2017 and comes into effect three months from the date of publication i.e. 1 June 2017. What this means in practice is:

  • the Policy applies to all new outsourcing arrangements entered into from 1 June 2017;
  • existing outsourcing arrangements have until 1 June 2018 to become compliant with the Policy;
  • outsourcing arrangements entered into between the date of publication and 1 June 2017 may choose to be in conformity with 2011 policy or the Policy;
  • where a registered person chooses prior to 1 June 2017 to opt in to the Policy in respect of existing outsourcing arrangements, it must file the Outsourcing Notification and (i) confirm in writing that it will adhere to the Policy and (ii) agree to be supervised by the JFSC in conformity with the Policy;
  • notwithstanding any of the above timelines provided, all outsourcing arrangements must be compliant with the Policy from 1 June 2018.

Key Practice Points

The underlying premise of the Policy is that registered persons remain fully responsible and accountable to the JFSC for any activity that is outsourced.

Business Risk Assessment

It is clear that any outsourcing arrangements entered into by a registered person are required to be risk assessed by the registered person prior to entering into such arrangements. This is in conformity with existing requirements under the relevant Codes of Practice and AML/Money Laundering compliance requirements that registered persons are subject to. In addition, registered persons are required to ensure that any sub-outsourcing arrangements are also in compliance with the requirements of the Policy.

Corporate Governance

In keeping with the requirement to assess the risk associated with any outsourcing, the guidance provides that due diligence must be conducted on the service provider, which would include considering any conflicts of interest or concentration/jurisdictional risks involved. The JFSC will expect to see board minutes and internal policies and procedures as evidence of such due diligence conducted on a service provider.

Outsourcing contracts

All outsourcing arrangements must be governed by documented, legally binding and enforceable agreements. Among other things, these contracts must (i) specify the activity to be outsourced (ii) provide the circumstances under which any sub-outsourcing is allowed (if applicable) (iii) the performance standards and reporting requirements upon the service provider (iv) termination provisions and (v) access rights to the JFSC to information and records relating to the outsourced activity.

Termination of outsourcing contracts

The requirements of the Policy with respect to termination of outsourcing arrangements present an additional burden on registered persons. A registered person is required to ensure:

  • contingency plans are documented and in place to enable alternative arrangements to be put in place 'without undue delay and with minimum disruption to its business';
  • such contingency plans should include provisions which allow the registered person/member of the group to take over the activity or transfer such to another suitable service provider;
  • it is reasonable to assume that the JFSC will expect such 'suitable' providers to also be risk assessed and due diligence to be undertaken in respect of all such proposed alternate service providers;
  • contingency plans must be periodically tested;
  • no outsourcing arrangement is to be terminated until the JFSC is notified that either (i) the registered person will undertake the activity outsourced itself or (ii) the JFSC's written no-objection has been procured to proposed new arrangements.

Outsourcing Notification and No-Objection

The notification form is available on the JFSC website and seeks information on, among other things, the type of activity outsourced, the reasons for the outsourcing and a summary of how the activity impacts upon the regulated activity of the registered person including a risk assessment. Any proposal to outsource or make material changes to an existing outsourcing arrangement will require a prior 'no-objection' from the JFSC. The JFSC will use 'best endeavours' to respond within 20 days and, as such, notice of such proposed outsourcing arrangements should be given at an early stage in the process. No outsourcing arrangements are to be entered into until such no-objection is received.

Funds and Fund Services Business Providers

There are certain exemptions from adherence to the Policy provided to funds and fund service providers, which are available as long as the following conditions are met:

  • the service providers to the fund are clearly disclosed to the JFSC and investors in the offer document;
  • a change of service providers post authorisation of the fund where the offer document is not to be updated and where investor consent is not required is to be notified to the investors;
  • the offer document/investor notification seeking investor consent to a change in service provider makes clear and unequivocal (in a manner suitable to the level of the investors' financial sophistication, statements as to the following):
    • the nature of any activity to be undertaken by such service providers;
    • any material risks connected with the activity (including any conflicts of interest); and
    • where the fund's investors should deal directly with those service providers in respect of the activities they carry out.
  • For completeness, where a custodian/prime broker acting in relation to a Certified Fund is a member of an international corporate Group, and the sub-custodians engaged by the custodian are also members of the same Group, the JFSC would not expect the fund prospectus to list or describe each sub-custodian separately.
  • Where the service provider to the fund enters into any sub-outsourcing or any of the above conditions are not met, the Policy will apply.

Other Relevant Exemptions

Certain activities that might otherwise be outsourcing for the purposes of the Policy are exempt from compliance with the Policy. These include:

  • MoME arrangements;
  • provisions of advisory and other services to a registered person e.g. purchase of investment advisory services (where investment advice is not part of the licenced/regulated activity conducted by the registered person) or purchase of standardised services (e.g. market information services); and
  • activity which is performed by a branch on behalf of its head office or another branch where all of these entities are parts of the same legal person.


The Policy is not inflexible and an application to the JFSC for a variation to the requirements of the Policy is permitted under certain circumstances. The JFSC will consider each application on a case-by-case basis. Notwithstanding this flexibility, all arrangements with service providers (even those which were/are ostensibly not captured as 'outsourcing' or 'delegation' under the 2011 policy) will need to be reviewed to ensure that they are not captured by the Policy and if they are, must become compliant with the Policy by 1 June 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions