Document ID: chunk:federal_register_of_legislation:F2023L01242:body:0:p10
Version: federal_register_of_legislation:F2023L01242
Segment Type: other
Provision Reference: 
Character Range: 26668–29755

service providers that it materially relies upon in providing the service to the APRA-regulated entity through sub-contracting or other arrangements;
(e)          require the liability for any failure on the part of any sub-contractor to be the responsibility of the service provider;
(f)           include a force majeure provision indicating those parts of the contract that would continue in the case of a force majeure event; and
(g)          termination provisions including, but not limited to, the right to terminate both the arrangement in its entirety or parts of the arrangement. For an RSE licensee, termination provisions must include the ability for the RSE licensee to terminate the arrangement where to continue the arrangement would be inconsistent with the RSE licensee's duty to act in the best financial interests of beneficiaries (refer to subsection 52(2)(c) of the SIS Act).
55.         The formal agreement must also include provisions that:
       (a)          allow APRA access to documentation, data and any other information related to the provision of the service;
       (b)          allow APRA the right to conduct an on-site visit to the service provider; and
       (c)          ensure the service provider agrees not to impede APRA in fulfilling its duties as prudential regulator.
56.         For each material arrangement an APRA-regulated entity must:
       (a)          identify and manage risks that could affect the ability of the service provider to provide the service on an ongoing basis;
       (b)          identify and manage risks to the APRA-regulated entity that could result from the arrangement, such as step-in risk or contagion risk;
       (c)          ensure it can execute its BCP if needed; and
       (d)          ensure it can conduct an orderly exit from the arrangement if needed.
57.         APRA may require an APRA-regulated entity to review and make changes to a service provider arrangement where it identifies heightened prudential concerns.

Monitoring, notifications and review
58.         An APRA-regulated entity must monitor and ensure that senior management receive reporting on material arrangements commensurate with the nature and usage of the service. This monitoring must include a regular assessment of:
(a)          performance under the service agreement with reference to agreed service levels;
(b)          the effectiveness of controls to manage the risks associated with the use of the service provider; and
(c)          compliance of both parties with the service provider agreement.
59.         An APRA-regulated entity must notify APRA:
(a)          as soon as possible and not more than 20 business days after entering into or materially changing an agreement for the provision of a service on which the entity relies to undertake a critical operation; and
(b)          prior to entering into any material offshoring arrangement,[16] or when there is a significant change proposed to the arrangement, including in circumstances where data or personnel relevant to the service being provided will be