The Financial Services Authority (FSA) has given offshore outsourcing in India a clean bill of health after investigating concerns about the safety of customer data.
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The UK’s main City regulator visited 10 outsourcing operations in India to study their operations. Most of these provided services to UK retail banks and insurance companies.
After investigating the governance and data control systems in place for the operations visited, the FSA said offshore outsourcing posed no greater risk to customer data than in-house operations.
The main risk identified was the complexity of achieving suitable management and control from a distance. However, appropriate governance frameworks, risk management systems and controls can identify and mitigate operational risks from offshore outsourcing, said the FSA.
A recent report from Datamonitor said firms were set to increasingly offshore mortgage processing, insurance underwriting, and claims processing to countries such as India, in addition to established functions such as call centres and application processing.