Registered persons that wish to outsource and delegate any part of their regulated functions must comply with policy and guidance issued by the Jersey Financial Services Commission. That policy and guidance was revised in May 2011 in order, in particular, to distinguish between outsourcing and delegation in a funds context and by functionaries of funds.

The changes - which amend the original policy and guidance issued in October 2008 - are of significance, in particular, to fund services businesses, as the Commission will look to the registered person to take appropriate action to bring itself within the requirements of the Core Principles (see below), depending on whether the arrangements relate to outsourcing or delegation.

What has changed?

Registered persons (i.e. firms performing regulated activities falling within the scope of one or more of the Banking Business (Jersey) Law 1991, Collective Investment Funds (Jersey) Law 1988, Insurance Business (Jersey) Law 1996 and Financial Services (Jersey) Law 1998, as amended) ("Registered Persons") that wish to outsource or delegate one or more parts of their regulated functions must satisfy the revised requirements of the Policy Statement and Guidance Notes on: (1) Outsourcing; and (2) Delegation by Jersey Certified Funds and Fund Services Businesses (the "New Policy") issued by the Jersey Financial Services Commission (the "Commission") in May 2011 .

The New Policy now distinguishes between the 'outsourcing' and 'delegation' of regulated functions, a distinction recognized internationally by IOSCO. Accordingly:

  • Outsourcing occurs when a Registered Person decides to transfer the day-to-day running of some part of its business to another party. The activity outsourced can be either (i) a part of the Registered Person's existing business or operations; or (ii) an entirely new venture or operations system for which the Registered Person wishes to use outside expertise.
  • Delegation occurs where the Registered Person does not provide a certain service and therefore makes arrangements with a service provider in respect of specific services. In this case, investors or customers and the Commission know they should deal directly with the service provider for specific services, as those services do not in the first instance form part of the services to be provided directly by the Registered Person.


The outsourcing provisions set out in the New Policy apply to all Registered Persons. The New Policy remains unchanged insofar as outsourcing is concerned, save for the clarification that a Registered Person must inform the Commission of its intention to outsource prior to the commencement of the outsourcing arrangement. In the context of fund services business, the Commission will endeavour to raise any concerns in relation to the outsourcing proposal within 10 working days of the notification of the intention to outsource.


The delegation provisions set out in the New Policy apply only to Registered Persons which are fund services businesses. The New Policy sets out the following seven core principles ("Core Principles") which the Commission expects such a Registered Person to comply with:

  1. Before entering into a delegation arrangement, the Registered Person should ensure the regulatory framework of the service provider’s home jurisdiction provides protection for the investor equivalent to that in Jersey. In particular, when a delegate is situated in a country where the delegated functions are regulated and such functions may only be performed by a registered entity, the Registered Person should ensure that the delegate is duly registered to perform that function. Where a delegated party is not subject to the same level of regulatory supervision as the Registered Person a derogation from core principle No 1 may well be requested, and investors should be informed.
  2. When a Registered Person delegates any material part of its regulated functions, it must first ensure the service provider is fit and proper and can fulfill the task in a responsible, professional and suitable manner.
  3. A Registered Person must have a written delegation agreement with the service provider that clearly specifies the terms of engagement and the levels of service to be provided by the service provider. The existence of the delegation agreement should also be disclosed in the fund's offering document.
  4. A Registered Person must maintain sufficient capacity (i.e. skills and knowledge) to be able to assess whether the delegated activity is being performed adequately. It must also maintain adequate resources and procedures, including compliance plans, to be able to monitor the performance of the service provider.
  5. A Registered Person must be able to terminate the delegation as soon as reasonably practicable and have contingency plans for making alternative arrangements for the performance of the delegated function.
  6. Nothing in any delegation arrangements should prevent the Commission from exercising its statutory responsibilities. In particular, a Registered Person must ensure that the Commission is able to inspect books and records (or copies) relating to the delegated activity upon request and without undue delay, irrespective of whether they are in the hands of the Registered Person or the service provider.
  7. Before the delegate enters into a sub-delegation arrangement, the Registered Person must first approve the sub-delegate in accordance with Core Principle No 2 as if the sub-delegate were itself the delegate. Sub-delegation must not undermine the ability of the Registered Person or the Commission to monitor compliance with regulatory requirements.

The New Policy can be found here.