Part Application - Banking (prudential standard) determination No. 12 of 2006 - Prudential Standard APS 231 - Outsourcing - Application

Application

This Prudential Standard applies to all authorised deposit-taking institutions (ADIs) under the Banking Act.
An ADI must comply with this Prudential Standard from 1 April 2007 (referred to in this Prudential Standard as the effective date) except in those cases where paragraph 4 applies.
This Prudential Standard does not apply to an outsourcing agreement entered into prior to the effective date until the next scheduled review date of that agreement, provided the Board of the ADI is satisfied that the existing agreement generally complies with the requirements of this Prudential Standard.
This Prudential Standard only applies to outsourcing of a material business activity as defined in this Prudential Standard.

Interpretation

By operation of section 13(1) of the Legislative Instruments Act 2003, terms not defined in this Prudential Standard but which are defined in the Banking Act have the same meaning as in the Banking Act.
Outsourcing involves an ADI entering into an agreement with another party (including a related body corporate) to perform, on a continuing basis, a business activity which currently is, or could be, undertaken by the ADI itself.
For the purposes of this Prudential Standard, a reference to a related body corporate of an ADI is a reference to the meaning of “related body corporate” under section 50 of the Corporations Act 2001. A reference to a third party is a reference to an entity that is not the ADI or a related body corporate of the ADI. A reference to a service provider is a reference to the person providing the outsourced services to the ADI.
For the purposes of this Prudential Standard, offshoring means the outsourcing by an ADI of a material business activity associated with its Australian business to a service provider (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.