Participation in group-wide operations

13. A Level 3 Head must establish policies and procedures to address risks posed to the group from the participation of any prudentially regulated institution in Level 3 group-wide operations including, but not limited to, sharing premises with other Level 3 institutions, centralising back-office functions or outsourcing services to other Level 3 institutions.

14. Where a prudentially regulated institution participates in Level 3 group-wide activities, a Level 3 Head must:

(a) consider the risks posed to that institution on a standalone basis as a result of its participation in such activities;

(b) be satisfied that these ITEs are appropriately addressed by the Level 3 group’s risk management policies;

(c) ensure dealings with other parties arising from participation in group-wide operations are appropriately documented in written service agreements[2];

(d) facilitate APRA being able to obtain information required for the supervision of either individual prudentially regulated institutions or the Level 3 group as a whole; and

(e) ensure that there is a clear obligation under the written arrangements for any service provider to comply with any direction given by APRA in relation to the operations of any prudentially regulated institution within the Level 3 group.