In March 2017, the Central Bank of Ireland (the "Central Bank") issued a letter to Irish administrators in the funds industry on outsourcing of administration activities (the "Letter").

The Letter contains examples of good practice to assist administrators in ensuring compliance with outsourcing requirements. The Central Bank requires the information contained in the Letter to be brought to the attention of all board members and senior management of administrators.

Administrators are required to ensure that outsourcing arrangements comply with the Central Bank's Requirements on Outsourcing of Administration Activities in relation to Investment Funds ("Outsourcing Requirements"). The Outsourcing Requirements, which were previously contained in the Central Bank's AIF Rulebook, are now contained in the recently published Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017.

The Outsourcing Requirements are designed to ensure that administrators maintain a consistent standard of oversight on outsourcing activities to global service providers and also retain ultimate responsibility for outsourcing activities.

The Letter details the review of outsourcing arrangements undertaken by the Central Bank during 2016 and the results. The Central Bank found that up to 61% of administration activity was outsourced to other jurisdictions. Further key observations included:

  • not all firms under review maintained comprehensive outsourcing records;
  • not all overseas providers were regulated; if they were, they were not regulated in the same way as Irish administrators; and
  • the majority of firms under review had no tolerance levels set in respect of the amount of outsourcing permitted for a specific administration activity.

The Letter sets out examples of good practice to assist administrators who outsource their activities. The examples are not exhaustive, and firms should at all times be evaluating their own risks when it comes to outsourcing activities.

For the list of examples of good practice contained in the Letter, please click here.


The Central Bank is currently undertaking a review of outsourcing across all financial sectors. It is important that firms have in place strong controls around governance and oversight of any outsourcing arrangements.

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.