Are You in Control of Your Offshore Outsourcing?
ASIC delivered a clear message on 10 October 2025, warning AFSL holders that outsourcing does not mean offloading responsibility. The review found significant governance gaps, including poor risk management, inadequate oversight, and weak cyber resilience. ASIC Commissioner Alan Kirkland emphasised that licensees remain fully accountable for outsourced functions, especially when using offshore service providers (OSPs):
“Advice licensees and REs can outsource services but they cannot outsource their fundamental obligations… When licensees neglect their responsibilities, consumers, investors, and financial services businesses can be exposed to harm, such as exposure of personal information through cyber incidents.”
You can read the full ASIC media release here:
📖 ASIC flags risks in offshore outsourcing after review identifies governance gaps
Fraser Jack (The Cyber Collective) and Brian Jones (VA Platinum) unpack ASIC’s new guidance on outsourcing, especially offshore providers, and what it means for AFSLs, ACLs, licensees, and advice practices. Failing to manage these relationships can expose your clients to serious risks, including data breaches and service disruptions. The video is available on YouTube:
😟 Common Pitfalls Identified by ASIC:
- Unclear accountability for offshore tasks
- Inconsistent due diligence on OSPs
- Weak monitoring of cyber and privacy risks
- Conflicting obligations under foreign laws
🛠️ AICS Compliance Checklist: How to Strengthen Your Outsourcing Governance
- Conduct Due Diligence: Assess your OSP’s financial stability, regulatory history, and data security protocols.
- Formalise Contracts: Include clear SLAs, termination clauses, and compliance obligations.
- Monitor Performance: Establish regular reporting, audit, and escalation procedures.
- Assess Cyber Risk: Ensure your OSPs have robust cyber defences and incident response plans.
- Document Everything: Keep thorough records of assessments, decisions, and communications.
- Review Regularly: Reassess your OSPs annually or whenever services change.
🏆 Why This Matters:
By following these steps, you can reduce regulatory risk, protect client data, and demonstrate a culture of compliance—key to maintaining trust and avoiding enforcement action.
⚠️ The Cost of Inaction:
ASIC has already taken enforcement action against firms that failed to manage cyber risks. Ignoring these warnings could result in licence breaches, reputational damage, and financial penalties[1].
📣 Need Help?
If you’d like support reviewing your outsourcing governance, book a compliance consultation with AICS today: Contact – Australian Independent Compliance Solutions or email [email protected]
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