THIRD PARTY SERVICE PROVIDER DUE DILIGENCE

THIRD PARTY SERVICE PROVIDER DUE DILIGENCE

SERVICES

Due diligence and monitoring on your service providers – time for an ODD practitioner-led approach?

Due to increasing regulatory scrutiny and a significant trend towards outsourcing middle and back-office operations, now is the time for firms to get on top of service provider oversight. 

We have been commissioned on multiple assignments across multiple sectors and the trend identified at the end of last year has accelerated further into 2024. 

What type of service providers typically come up?

Fund administrators feature significantly and tend to be those firms that are relatively unknown. However, interestingly we see large, well known administrators in the mix too. Anecdotally, our work has witnessed a large and well respected administrator fail to undertake their duties fully and in keeping with the fund administrator agreement. Other service providers include crypto (digital asset) custodians, lenders, exchanges, online technology solutions for treasury management, outsourced technology platforms, online prime brokerage solutions and many more. This represents a diverse group of firms for which our team have the skill sets to take on.

Who is interested in service provider reviews and why?

Again, a broad range of clients are using our ODD expertise to supplement their own internal oversight arrangements. This ranges from allocators to managers and service providers themselves.

Please contact us for a sample Third Party Service Provider Due Diligence Report.

BENEFITS

  • We assist with selecting, monitoring and improving the services received from service providers
  • Addressing regulators’ concerns over the effectiveness of service provider oversight
  • Renegotiation of existing terms and arrangements
  • We offer reviews and reports on all service providers including: fund administrators, custodians, lenders / prime brokers, exchanges, banks, IT (hardware and software), compliance / regulatory consultants, hosts / platforms, data providers, lawyers, insurers, HR, payroll, tax, audit, background check services, etc. In addition, there are vendors who produce alternative data sets and, in turn, bring risks including: data compliance (privacy and personally identifiable information (PII) regulations, such as GDPR and CCPA), licensing and IP liability resulting from activities, such as web scraping.

HIGHLIGHTS

  • ODD reviews in the industry rarely include sample testing which, incidentally, is the backbone of every SOC/ISAE review. However, our clients benefit from us sample testing and we find that this is a highly valuable approach. Targets of our reviews are required to demonstrate and attest through testing that the procedures and controls that are designed to be in place are actually operating. For example for fund administrators, we test that management fees are being calculated correctly and examine that the work that going into striking a NAV has followed correct procedures.
  • Each of our ODD reports provide clients with a clear description of the service provider, the team that supports their own account / relationship, the controls and procedures operating and the degree to which they are being followed using our sample testing methodology. 

Let’s Talk

We’d love to support with your ODD needs and look forward to hearing from you, thank you

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