When ABC Insurance outsources its claims function, who remains responsible for FCA compliance?

When ABC Insurance outsources its claims function, it is still ultimately responsible for ensuring that all activities comply with the Financial Conduct Authority (FCA) regulations. This accountability stems from the principle that an organization cannot transfer legal responsibility when tasks are delegated to third parties.

Thus, while the outsourced company may handle the day-to-day activities related to claims processing, ABC Insurance must maintain oversight and ensure that the outsourced functions adhere to all regulatory requirements. This includes implementing necessary controls, monitoring compliance, and ensuring that the service provided does not compromise the policyholder's rights or the firm’s regulatory obligations.

In this context, the outsourced company's involvement does not relieve ABC Insurance from its compliance responsibilities, as clients and regulators will ultimately look to the insurer for adherence to financial regulations, contractual obligations, and fair treatment of customers. This underlines the importance of robust risk management practices and due diligence when selecting an outsourcing partner in the insurance industry.