Financial services outsourcing agreement (intra group)
Financial services outsourcing agreement (intra group)

The following Financial Services precedent provides comprehensive and up to date legal information covering:

  • Financial services outsourcing agreement (intra group)

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

This Agreement is made on [insert date]

Parties

  1. 1

    [Insert name of party] a company incorporated in England and Wales (under number [insert registered number ]) whose registered office is at [insert registered address] (the Service Provider) and

  1. 2

    [Insert name of party] a company incorporated in England and Wales (under number [insert registered number]) whose registered office is at [insert registered address] (the Firm)

    (each of the Service Provider and the Firm being a Party and together the Service Provider and the Firm are the Parties)

Recitals:

    1. (A)

      The Firm is an [insert, eg investment management and advisory firm] and is authorised and regulated by the Financial Conduct Authority (FCA)

    1. (B)

      The Firm is a wholly owned subsidiary of the Service Provider

    1. (C)

      The Parties have decided to enter into this Agreement to document those operational functions which are being outsourced to the Service Provider and which are, in the opinion of the Firm, important or

    1. critical to compliance by the Firm with the conditions and obligations of its authorisation or its other obligations under MiFID II, or its financial performance, or the soundness or the continuity of its investment services and activities.

    1. 1

      Definitions

      1. 1.1

        In this Agreement, unless otherwise provided:

        Agreed Service Levels

        1. means the service levels set out in Schedule 2 to this Agreement;

        Applicable Law

        1. means any law, rule, regulation, guidance, code of conduct and code of practice from time to time in force in the UK relating to a party’s obligations under this Agreement;

        Adverse Development

        1. means any development that may have a material impact on the ability of the Service Provider to provide the Services effectively and in compliance with applicable laws and regulatory requirements;

        Best Industry Practice

        1. means the best standards of the relevant industry for the provision of services which are comparable to the Services or the relevant part of them taking into account factors such as the nature, size and complexity of the parties;

        Clients

        1. means the clients of the Firm;

        Confidential Information

        1. means all non-public information (whether in oral, written or electronic form) given by one Party to the other or otherwise obtained by one Party relating to the other’s business, finance or technology, know-how, intellectual property, assets, strategy, products and customers, including without limitation information relating to management, financial, marketing, technical and other arrangements or operations of any associate, person, firm, or organisation associated with that Party;

        Contingency Plan

        1. means a written document detailing the procedures to be followed and actions to be undertaken in order to recover from a Disaster and restore the Services such that they are performed in accordance with the Agreement and periodic testing of backup facilities, as amended or updated by the Parties from time to time;

        Controller

        1. has the meaning given in applicable Data Protection Laws from time to time;

        Data Protection Laws

        1. means any Applicable Laws relating to the processing, privacy and/or use of Personal Data, as applicable to either Party or the Services, including:

          1. (a)

            the GDPR;

          2. (b)

            the Data Protection Act 2018;

          3. (c)

            any laws which implement any such laws;

          4. (d)

            any laws that replace, extend, re-enact, consolidate or amend any of the foregoing; and

          5. (e)

            all guidance, guidelines and codes of practice issued by any relevant Data Protection Supervisory Authority relating to such Data Protection Laws (in each case whether or not legally binding);

        Data Protection Supervisory Authority

        1. means any regulator, authority or body responsible for administering Data Protection Laws;

        Data Subject

        1. has the meaning given in applicable Data Protection Laws from time to time;

        Disaster

        1. means a disruption to the performance of the Services (whether caused by a natural or man-made phenomenon or occurrence) that is acknowledged by the Customer to be a Disaster;

        Effective Date

        1. means the date of this Agreement;

        EU

        1. means the European Union;

        EU(W)A 2018

        1. means the European Union (Withdrawal) Act 2018;

        FCA

        1. means the UK Financial Conduct Authority or any other successor body carrying out its functions;

        FCA Handbook

        1. means the handbook of rules and guidance published from time to time by the FCA;

        GDPR

        1. means the General Data Protection Regulation, Regulation (EU) 2016/679;

        MiFID II

        1. means the Markets in Financial Instruments Directive 2014/65/EU;

        Operational Service Managers

        1. means the individuals listed in Schedule 1 who may change from time to time and the Schedule will be amended accordingly;

        Personal Data

        1. has the meaning given in applicable Data Protection Laws from time to time;

        Personal Data Breach

        1. has the meaning given in applicable Data Protection Laws from time to time;

        processing

        1. has the meaning given in applicable Data Protection Laws from time to time (and related expressions, including process, processing, processed and processes shall be construed accordingly);

        Processor

        1. has the meaning given in applicable Data Protection Laws from time to time;

        Protected Data

        1. means Personal Data received from or on behalf of the Firm, or otherwise obtained by the Service Provider (or anyone acting on its behalf) in connection with the performance of the Service Provider’s obligations under this Agreement;

        Service Failure

        1. means a failure by the Service Provider to provide the Services in accordance with Agreed Service Levels;

        Service Provider’s Personnel

        1. means all employees, staff, other workers, agents and consultants of the Service Provider and of any Sub-contractor;

        Services

        1. means each Service to be provided under this Agreement as set out in Schedule 1;

        Sub-contract

        1. means any contract between the Service Provider and a third party (other than an employee) pursuant to which the Service Provider agrees to source the performance of the Services (or any of them) from that third party;

        Sub-contractor

        1. means those persons with whom the Service provider enters into a Sub-contract and the direct and indirect agents, contractors and sub-contractors of any such Sub-Contractor contracted to perform the Services (or any of them);

        Sub-processor

        1. means any Sub-contractor engaged by the Service Provider (or by any other Sub-processor) for carrying out any processing activities in respect of the Protected Data;

        Termination Assistance

        1. means the necessary assistance (which shall include knowledge transfer), as may be reasonably required by the Firm, to be provided by the Service Provider to the Firm to complete the transition of all or part of the Services from the Service Provider to a third party designated by the Firm or to the Firm following the date of termination of this Agreement or the date of any notice of termination, at the Customer’s election and request;

        Termination Assistance Period

        1. means the period of time during which the Service Provider provides Termination Assistance to the Firm.

      1. 1.2

        Unless the context otherwise requires:

        1. 1.2.1

          each gender includes the others;

        1. 1.2.2

          the singular includes the plural and vice versa;

        1. 1.2.3

          references to clauses and sub-clauses are to clauses and/or sub-clauses of this Agreement;

        1. 1.2.4

          references to persons include individuals, unincorporated bodies, government entities, companies and corporations;

        1. 1.2.5

          the words ‘include’, ‘includes’ and ‘including’ are deemed to be followed by the words ‘without limitation’;

        1. 1.2.6

          the words and phrases ‘other’, ‘including’ and ‘in particular’ or similar words shall not restrict the generality of any preceding words or be construed as being limited to the same class, acts, things or matters as the preceding words where a wider construction is possible;

        1. 1.2.7

          an obligation not to do something includes an obligation not to cause or allow that thing to be done;

        1. 1.2.8

          the descriptive headings to clauses in this Agreement are inserted for convenience only, have no legal effect and shall be ignored in the interpretation of this Agreement;

        1. 1.2.9

          where any obligation in this Agreement is expressed to be undertaken or assumed by any Party, that obligation is to be construed as including a requirement that the Party concerned exercises all rights and powers of control over the affairs of any other person which that Party is able to exercise (whether directly or indirectly) in order to secure performance of the obligation;

        1. 1.2.10

          references to UK legislation include any re-enactment or modification thereof;

        1. 1.2.11

          references to EU legislation, or any provision thereof, include such legislation or provision as amended, partially revoked or replaced pursuant to any statutory instrument made under EU(W)A 2018 and/or any other UK legislation, in relation to the exit of the UK from the EU or otherwise;

        1. 1.2.12

          references to this Agreement or to any specified provision in this Agreement are to this Agreement or that provision as in force for the time being and as amended from time to time in accordance with its terms;

        1. 1.2.13

          references to books, records or other information include paper, electronically or magnetically stored data, film, microfilm, and information in any other form; and

        1. 1.2.14

          references to ‘writing’ or ‘written’ include faxes and any other method of reproducing words in a legible and non-transitory form (including emails and other means of electronic communication).

    1. 2

      The Services

      1. 2.1

        The Firm appoints the Service Provider to provide the Services and by entering into this Agreement, the Service Provider agrees to provide the Services on the terms and conditions of this Agreement and in accordance with the instructions of the Firm from time to time.

      1. 2.2

        Notwithstanding such appointment by the Firm and agreement by the Service Provider, the Firm reserves the right, in its sole discretion, to provide any or all of the Services itself or to contract with third party suppliers to perform all or any part of the Services at any time.

      1. 2.3

        The Service Provider agrees to co-operate with any third parties engaged by the Firm in connection with the Services or in connection with the supply of goods or services related to the provision of the Services.

      1. 2.4

        If the Parties agree that the Service Provider will provide additional services to the Firm, then the Parties will amend the Agreement by inserting a new version of Schedule 1.

      1. 2.5

        The Parties agree and acknowledge that, notwithstanding any other provision of this Agreement, the Firm shall remain fully responsible for discharging all of its obligations under MiFID II, and that the Firm is required to comply with the following conditions:

        1. (a)

          that the outsourcing of the Services does not result in the delegation by the senior management of the Firm of its responsibility;

        1. (b)

          that the relationship and obligations of the Firm towards its clients under the terms of MiFID II is not altered;

        1. (c)

          that the conditions with which the Firm must comply in order to be authorised in accordance with Article 5 of MiFID II, and to remain so, are not undermined; and

        1. (d)

          that none of the other conditions subject to which the Firm’s authorisation was granted are removed or modified.

    1. 3

      Service Levels

      1. 3.1

        The Service Provider will ensure that the Services meet or exceed the Agreed Service Levels at all times from the Effective Date

      1. 3.2

        The Service Provider will provide the Firm with a monthly report detailing its performance in respect of each of the Agreed Service Levels

      1. 3.3

        If there is an Adverse Development and/or Service Failure of which the Service Provider is aware, the Service Provider will:

        1. 3.3.1

          notify the Firm immediately of the Adverse Development and/or Service Failure;

        1. 3.3.2

          provide the Firm with a plan to correct the Adverse Development and/or Service Failure; and

        1. 3.3.3

          use all additional resources and take all remedial action that is necessary to rectify or prevent the Adverse Development and/or Service Failure from recurring.

      1. 3.4

        Should an Adverse Development and/or Service Failure continue for more than 14 days or if the Firm reasonably believes that the reason for the Adverse Development or Service Failure has not been corrected, then:

        1. 3.4.1

          the Firm will provide the Service Provider with a request in writing for a remediation meeting to take place within 7 days. The remediation meeting will be attended by the Operational Service Managers;

        1. 3.4.2

          following a remediation meeting, if the Parties are unable to agree on a method to resolve the Adverse Development and/or Service Failure, the terms of clause 3.7. will apply.

      1. 3.5

        The Operational Service Managers will have regular meetings to monitor and review the performance of the Agreed Service Levels applicable to those Operational Service Managers. The Operational Service Managers will agree any action points resulting from those meetings and note them accordingly.

      1. 3.6

        A review meeting to assess the performance of the Service Provider in the delivery of the Services will be held annually or as agreed between the Parties. Each meeting will be attended by the senior representatives of the Firm and the Service Provider, together with the Operational Service Managers. At each meeting the Agreed Service Levels will be reviewed.

      1. 3.7

        Following the failure in accordance with clause 3.4.2 above, the chief executive officer of the Service Provider will hold a meeting with a senior representative of the Firm outlining the reason for the failure and the procedures used to correct the failure. If within 5 days from the date of that meeting the matter is not satisfactorily resolved, clause 7.1 will apply.

    1. 4

      Assessment, review, supervision, auditing and access

      1. 4.1

        Upon reasonable notice, the Service Provider will allow the Firm, the FCA and the auditors of the Firm to access any of the Service Provider’s premises, personnel and relevant records as may be reasonably required in order to:

        1. 4.1.1

          enable the Firm to assess the standard of performance of the Service Provider, review on an ongoing basis the Services provided by the Service Provider, and effectively supervise the Services and manage the risks associated with the outsourcing provided for in the Agreement; and

        1. 4.1.1

          enable the Firm, its auditors and the FCA (or any other competent authority) to have effective access to data related to the Services, as well as to the relevant business premises of the Service Provider, where necessary for the purpose of effective oversight, and to enable the FCA to exercise those rights of access.

      1. 4.2

        The Service Provider will bear its own costs in complying with any request of the Firm, its auditors or the FCA (or any other competent authority) in relation to any assessment, review or supervision which is conducted by the Firm.

    1. 5

      Warranties, Representations and Undertakings

      1. 5.1

        The Service Provider warrants, represents and undertakes to the Firm that:

        1. 5.1.1

          it has the ability, capacity, sufficient resources, appropriate organisational structure supporting the performance of the Services, and any authorisation required by law to perform the Services, reliably and professionally;

        1. 5.1.2

          it will carry out the Services effectively and in compliance with applicable law and regulatory requirements;

        1. 5.1.3

          it will properly supervise the carrying out of the Services, and adequately manage the risks associated with the outsourcing provided for in the Agreement;

        1. 5.1.4

          it will co-operate with the FCA (or any other competent authority of the Firm) in connection with the Services;

        1. 5.1.5

          it will protect any confidential information relating to the Firm and its clients

        1. 5.1.6

          it will discharge its obligations under the Agreement using personnel of required skill, experience and qualifications and with all due skill, care and diligence including in accordance with Best Industry Practice;

        1. 5.1.7

          it will provide the Services (to the extent relevant to client agreements) in accordance with the client agreements existing between the Firm and the Clients (full details of which have been provided by the Firm to the Service Provider) and will not undertake any act or activity which would have the direct or indirect effect of putting the Firm in breach of the client agreements or any relevant obligations under MiFID II or FCA regulatory obligations and procedures;

        1. 5.1.8

          each of the Service Provider’s Personnel is suitably qualified, adequately trained and capable of providing the Services in respect of which they are engaged;

        1. 5.1.9

          there is an adequate number of the Service Provider’s Personnel to provide the Services properly;

        1. 5.1.10

          only those people who are authorised by the Service Provider are involved in providing the Services;

        1. 5.1.11

          all of the Service Provider’s Personnel will comply with all of the Firm’s relevant policies;

        1. 5.1.12

          it will notify the Firm immediately if it becomes aware of any Adverse Development or Service Failure; and

        1. 5.1.13

          it has in place and will action as necessary and in any event immediately upon the request of the Firm a Contingency Plan that shall provide for the continuation of the performance of the Services with minimal interruption in the event of a Disaster and that it shall discuss with the Firm, and update as necessary, the Contingency Plan at least once in every calendar year.

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