Document ID: chunk:federal_register_of_legislation:F2012L02223:body:0:p2
Version: federal_register_of_legislation:F2012L02223
Segment Type: other
Provision Reference: 
Character Range: 2789–6021

their activities outside Australia; and
     * notify APRA after entering into agreements to outsource material business activities.

Authority
     1. This Prudential Standard is made under section 34C of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

Application
    2.             This Prudential Standard applies to all registrable superannuation entity (RSE) licensees (RSE licensees) under the SIS Act.[1]

    3.             All RSE licensees must comply with this Prudential Standard in its entirety, unless otherwise expressly indicated.

    4.             Nothing in this Prudential Standard prevents an RSE licensee from adopting and applying a group policy used by a connected entity or a related body corporate within the group[2], provided that the policy has been approved by the Board of the RSE licensee (the Board) and meets the requirements of this Prudential Standard.[3]

    5.             Subject to paragraph 35, this Prudential Standard commences on 1 July 2013.

Interpretation
    6.             Outsourcing involves an RSE licensee entering into an arrangement with any other party to perform, on a continuing basis, a business activity that currently is, or could be, undertaken by the RSE licensee itself.

    7.             For the purposes of this Prudential Standard, 'offshoring' means the outsourcing by an RSE licensee of a material business activity to a service provider[4] 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.

Materiality
    8.             This Prudential Standard only applies to the outsourcing of a material business activity as defined in this Prudential Standard.

    9.             A 'material business activity' is one that has the potential, if disrupted, to have a significant impact on an RSE licensee's business operations[5], its ability to manage risks effectively, the interests, or reasonable expectations, of beneficiaries[6] or the financial position of the RSE licensee, any of its RSEs or its connected entities, having regard to such factors as:

       (a)          the financial and operational impact and impact on reputation of a failure of the service provider to perform over a given period of time;

       (b)          the cost of the outsourcing arrangement as a share of total costs;

       (c)          the degree of difficulty, including the time taken, in finding an alternative service provider or bringing the business activity in-house;

       (d)          the ability of the RSE licensee to meet regulatory requirements if there are problems with the service provider;

       (e)          potential losses to beneficiaries and other affected parties in the event of a service provider failure; and

       (f)           affiliation or other relationship between the RSE licensee and the service provider.

    10.         For the purposes