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Banking, Insurance and Life Insurance (prudential standard) determination No. 1 of 2014 - Prudential Standard CPS 231 - Outsourcing
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Terms that are defined in Prudential Standard APS 001 Definitions (APS 001), Prudential Standard GPS 001 Definitions (GPS 001) or Prudential Standard LPS 001 Definitions (LPS 001) appear in bold the first time they are used in this Prudential Standard.
A ‘Level 2 group’ is:
(a) the consolidation of institutions defined as Level 2 in APS 001; or
(b) a Level 2 insurance group as defined in GPS 001.
(a) where an ADI that is a member of a Level 2 group is not a subsidiary of an authorised banking NOHC or another ADI, that ADI;
(b) where an ADI that is a member of a Level 2 group is a subsidiary of an authorised banking NOHC, that authorised banking NOHC; or
(c) the parent entity of a Level 2 insurance group as defined in GPS 001.
‘Outsourcing’ involves a regulated institution entering into an arrangement with another party (including a related body corporate) to perform, on a continuing basis, a business activity that currently is, or could be, undertaken by the regulated institution itself.
For the purposes of this Prudential Standard, ‘offshoring’ means the outsourcing by a regulated institution of a material business activity associated with its Australian business to a service provider[5] (including a related body corporate) where the outsourced activity is to be conducted outside Australia. Offshoring includes arrangements where the service provider is incorporated in Australia, but the physical location of the outsourced activity is outside Australia. Offshoring does not include arrangements where the physical location of an outsourced activity is within Australia but the service provider is not incorporated in Australia.
The international business of a Level 2 group does not constitute offshoring as defined in paragraph 11; therefore, the requirements of this Prudential Standard relating to offshoring do not apply to the international business of a Level 2 group. However, the Board of the Head of a Level 2 group must comply with any requirement relating to offshoring in respect of any other activity falling within the meaning of offshoring under this Prudential Standard.