ASIC Puts Offshore Outsourcing Under the Microscope For Responsible Entities

The Australian Securities and Investments Commission (ASIC) recently released a paper with a focus on offshore outsourcing for Australian Responsible Entities (REs). The discussion paper titled Review of offshore outsourcing – Responsible entities, was released on the 10th October 2025.

ASIC's review involved two phases. The initial phase involved investigating 30 REs, of which 17 indicated they use OSPs in some capacity. The second phase dived deeper into 10 firms that indicated they use Offshore Service Providers (OSPs) for functions like fund administration, investment processes, custody, and transaction processing.

The discussion paper further looks at the obligations for Responsible Entities with ASIC's review, reiterating that REs maintain and have responsibility for outsourced functions. Three key areas that REs must address include:

• Having measures in place to ensure that due skill and care are taken in choosing suitable service providers
• Monitor the ongoing performance of service providers, and
• Appropriately deal with any actions by service providers that breach service level agreements (SLAs) or the REs general obligations.

The discussion paper identified and highlighted several risks that REs face when using offshore service providers. At a glance, these risks include:

• Loss of control over certain outsourced tasks and business functions
• Operational disruptions due to the potential of less reliable infrastructure offshore, as opposed to here in Australia
• Data, Technology and protection of client information
• Cyber Security, detection and management of cyber incidents or data breaches

The article continued to dive deeper into the above topics and also highlighted considerations and best practices for REs when developing, modifying or reviewing potential arrangements with offshore service providers.

Whilst outsourcing provides plenty of benefits, it does potentially increase risks. If you're an RE weighing up offshore outsourcing, a thorough evaluation of options should also consider the potential strategic advantages of an in-sourced approach.

An in-house strategy, executed with the right systems, technology and processes in place, delivers significant benefits and helps address risks identified by ASIC when using the offshore outsourced approach. By maintaining key resources, data and people locally, businesses can:

• Maintain Control of operations, people and resources.
• Ensure the level of service meets expectations
• Strengthen security-related aspects

If you're an RE and you want to evaluate an in-house approach to maintain control, Titanium offers in-house software solutions designed for REs, funds and investment managers across the funds management industry.

Our software solutions cover fund administration, registry, onboarding and other day-to-day operations for funds. This delivers a comprehensive solution, with one provider, allowing you to manage critical operational functions securely and locally.

Get in touch to request a free demo today to see how Titanium can help you.

Disclaimer: The information on Titanium Digital Insights is for general informational purposes only and does not constitute legal or regulatory advice. Titanium is a software company, and users should consult qualified professionals to ensure compliance with applicable regulations.