ASIC slams licensees' lax offshoring governance

Most financial advice licensees that rely on offshore service providers (OSPs) fail to adequately assess, monitor and audit their arrangements thus putting their processes and businesses at risk, a new ASIC investigation reveals.

- Karren Vergara

ASIC's review of 10 financial advice licensees with more than 300 representatives using OSPs over the last two years found that local practices depend on their overseas representative to ensure risks are managed appropriately.

This puts advice firms' data and technology at risk. It also risks the loss of control over some outsourced tasks or business functions that can impede the ability to protect the confidentiality of business and client information, ASIC said.

ASIC also engaged with six intermediary businesses based in the Philippines, India and Sri Lanka offering outsourcing solutions to Australian licensees to understand the services and infrastructure they offered and their cyber security arrangements.