The FCA's Position Is Unambiguous: You Can Outsource the Function. You Cannot Outsource the Responsibility.
SYSC 8 is one of those rules that sounds straightforward until something goes wrong — and then firms discover that their outsourcing arrangements were governance theatre rather than governance. The regulator doesn't care that your IT provider failed, your compliance monitoring was outsourced to a firm that cut corners, or your payment processor had a data breach. The question it asks is whether you conducted adequate due diligence before engagement, maintained appropriate oversight throughout, had contractual protections in place, and could demonstrate continuous monitoring. For FCA-regulated firms across every sector, outsourcing is now a material regulatory risk in its own right — one that touches SYSC 8/13, CASS, UK GDPR Article 28, operational resilience requirements, and Consumer Duty simultaneously. This comprehensive Outsourcing Policy gives firms a complete, board-approved framework covering every stage from pre-contractual due diligence through contractual controls, ongoing monitoring, data protection, business continuity, and exit management — built to satisfy FCA supervisory expectations across all regulated sectors.
Outsourcing failure doesn't just disrupt operations. It generates enforcement correspondence.
What's included: Full regulatory mapping — SYSC 8 (systems and controls for outsourced functions/oversight/supervisory access), SYSC 13 (third-country outsourcing/enhanced due diligence/legal enforceability), CASS (client asset protection/segregation/reconciliation), FSMA 2000, ICOBS (outsourced insurance activities), CONC (credit-related outsourcing), PSR 2017 (payment function outsourcing), COBS/FUND (investment services), UK GDPR Article 28 (data processor obligations), DPA 2018, SM&CR SYSC 24-27, Consumer Duty PS22/9, PRIN 11 · Four-category risk framework — Operational/Financial/Reputational/Compliance/Strategic/Concentration Risk assessed across Critical (essential to regulated activities/direct customer impact/no immediate alternatives), Important (significant operational impact/limited alternatives), Standard (routine/readily replaceable) · Pre-contractual due diligence matrix — financial assessment (three-year audited accounts/credit ratings/liquidity ratios/professional indemnity/cyber liability), regulatory verification (FCA permissions/enforcement history/AML-CTF procedures/industry standards), operational capability (experience/key personnel/BCP/quality assurance/capacity), information security (ISO 27001/encryption/access controls/incident response) · Mandatory contractual terms — scope/deliverables, SLA with penalty clauses, UK GDPR Article 28 data processing agreement (subject matter/duration/nature/purpose/data types/processor obligations/sub-processor restrictions/breach notification/return/deletion), right of audit, termination with notice periods, sub-contracting restrictions, liability/indemnification · SLA performance matrix — service availability (monthly), quality standards (quarterly), regulatory compliance (as required) — with SMART metrics · Ongoing monitoring — monthly minimum/weekly or real-time for critical functions/unannounced inspection rights · Annual audit of all arrangements/more frequent for critical/high-risk · Three-tier escalation — operational level (2-day trigger), senior management (5-day unresolved), immediate for regulatory/data security/customer service failures · Remediation plan standard — 10 business days/root cause analysis/corrective actions/preventive measures/weekly progress reports · Termination matrix — material breach (30 days/Senior Management), regulatory non-compliance (immediate/Compliance Officer), commercial (90 days/Board) · Business continuity testing schedule — desktop exercises quarterly, partial activation semi-annually, full end-to-end annually · Cross-border transfer framework — Standard Contractual Clauses/adequacy decisions/documented reviews · Backup provider requirements — pre-qualified with due diligence, framework agreements enabling rapid activation, recovery time objectives/recovery point objectives defined · Data processor agreement mandatory provisions — processing specification/security measures/sub-processor approval/data subject rights/breach notification within 72 hours/deletion on termination · Board governance — strategy and risk appetite approval/material arrangements approval/quarterly MI reporting · SMF accountability for all outsourced functions regardless of provider failure
Built for: Chief Risk Officers, Chief Compliance Officers, COOs, SMF holders, and governance teams at FCA-regulated firms who need a complete SYSC 8-aligned Outsourcing Policy that governs every third-party relationship from initial due diligence through to exit — and that withstands both FCA supervisory scrutiny and board-level governance expectations.
The FCA's Position Is Unambiguous: You Can Outsource the Function. You Cannot Outsource the Responsibility.
SYSC 8 is one of those rules that sounds straightforward until something goes wrong — and then firms discover that their outsourcing arrangements were governance theatre rather than governance. The regulator doesn't care that your IT provider failed, your compliance monitoring was outsourced to a firm that cut corners, or your payment processor had a data breach. The question it asks is whether you conducted adequate due diligence before engagement, maintained appropriate oversight throughout, had contractual protections in place, and could demonstrate continuous monitoring. For FCA-regulated firms across every sector, outsourcing is now a material regulatory risk in its own right — one that touches SYSC 8/13, CASS, UK GDPR Article 28, operational resilience requirements, and Consumer Duty simultaneously. This comprehensive Outsourcing Policy gives firms a complete, board-approved framework covering every stage from pre-contractual due diligence through contractual controls, ongoing monitoring, data protection, business continuity, and exit management — built to satisfy FCA supervisory expectations across all regulated sectors.
Outsourcing failure doesn't just disrupt operations. It generates enforcement correspondence.
What's included: Full regulatory mapping — SYSC 8 (systems and controls for outsourced functions/oversight/supervisory access), SYSC 13 (third-country outsourcing/enhanced due diligence/legal enforceability), CASS (client asset protection/segregation/reconciliation), FSMA 2000, ICOBS (outsourced insurance activities), CONC (credit-related outsourcing), PSR 2017 (payment function outsourcing), COBS/FUND (investment services), UK GDPR Article 28 (data processor obligations), DPA 2018, SM&CR SYSC 24-27, Consumer Duty PS22/9, PRIN 11 · Four-category risk framework — Operational/Financial/Reputational/Compliance/Strategic/Concentration Risk assessed across Critical (essential to regulated activities/direct customer impact/no immediate alternatives), Important (significant operational impact/limited alternatives), Standard (routine/readily replaceable) · Pre-contractual due diligence matrix — financial assessment (three-year audited accounts/credit ratings/liquidity ratios/professional indemnity/cyber liability), regulatory verification (FCA permissions/enforcement history/AML-CTF procedures/industry standards), operational capability (experience/key personnel/BCP/quality assurance/capacity), information security (ISO 27001/encryption/access controls/incident response) · Mandatory contractual terms — scope/deliverables, SLA with penalty clauses, UK GDPR Article 28 data processing agreement (subject matter/duration/nature/purpose/data types/processor obligations/sub-processor restrictions/breach notification/return/deletion), right of audit, termination with notice periods, sub-contracting restrictions, liability/indemnification · SLA performance matrix — service availability (monthly), quality standards (quarterly), regulatory compliance (as required) — with SMART metrics · Ongoing monitoring — monthly minimum/weekly or real-time for critical functions/unannounced inspection rights · Annual audit of all arrangements/more frequent for critical/high-risk · Three-tier escalation — operational level (2-day trigger), senior management (5-day unresolved), immediate for regulatory/data security/customer service failures · Remediation plan standard — 10 business days/root cause analysis/corrective actions/preventive measures/weekly progress reports · Termination matrix — material breach (30 days/Senior Management), regulatory non-compliance (immediate/Compliance Officer), commercial (90 days/Board) · Business continuity testing schedule — desktop exercises quarterly, partial activation semi-annually, full end-to-end annually · Cross-border transfer framework — Standard Contractual Clauses/adequacy decisions/documented reviews · Backup provider requirements — pre-qualified with due diligence, framework agreements enabling rapid activation, recovery time objectives/recovery point objectives defined · Data processor agreement mandatory provisions — processing specification/security measures/sub-processor approval/data subject rights/breach notification within 72 hours/deletion on termination · Board governance — strategy and risk appetite approval/material arrangements approval/quarterly MI reporting · SMF accountability for all outsourced functions regardless of provider failure
Built for: Chief Risk Officers, Chief Compliance Officers, COOs, SMF holders, and governance teams at FCA-regulated firms who need a complete SYSC 8-aligned Outsourcing Policy that governs every third-party relationship from initial due diligence through to exit — and that withstands both FCA supervisory scrutiny and board-level governance expectations.
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