In order to encourage the sub-contracting of non-core activities to specialist service providers, the Luxembourg government has put in place specific regulation for companies that supply specialised services to financial institutions.
In 2003, the status of Financial Sector Professional (PSF) was thus extended to cover businesses carrying on operational services that imply access to confidential data.
In order to differentiate, from a functional point of view, those PSFs exclusively offering operational services from PSFs engaged in financial services, such as asset management, four categories of PSF were recently grouped together under the term "Support PSF":
- client communication agents
- administrative agents
- primary IT systems operators
- secondary IT systems and network operators
These service providers are subject to authorisation and ongoing supervision by the CSSF, like the financial institutions themselves, so helping to reduce operational risk and guaranteeing the application of confidentiality rules.
The law requires service providers to respect strict auditing rules and to apply best practice standards in order to protect the confidentiality of client data to which they have access.
This approach is unique to Luxembourg and has contributed to the development of a centre of excellence in the regulated outsourcing of a whole range of activities, adding a further incentive to companies for consolidating their central services in Luxembourg.