Document ID: chunk:federal_register_of_legislation:F2012L02223:body:0:p6
Version: federal_register_of_legislation:F2012L02223
Segment Type: other
Provision Reference: 
Character Range: 14639–17800

business activity so that APRA may satisfy itself that the impact of the offshoring arrangement has been adequately addressed as part of the RSE licensee's risk management framework.

    29.         If, in APRA's view, the offshoring agreement involves risks that the RSE licensee is not managing appropriately, APRA may require the RSE licensee to make other arrangements for the outsourced activity as soon as practicable.[14]

Monitoring the relationship
    30.         An RSE licensee must ensure it has sufficient and appropriate resources to manage and monitor each outsourcing relationship at all times. The type and extent of resources required will depend on the materiality of the outsourced business activity. At a minimum, monitoring must include:

       (a)          maintaining appropriate levels of regular contact with the service provider. This will range from daily operational contact to senior management involvement; and

       (b)          a process for regular monitoring of performance under the agreement, including meeting criteria concerning service levels.

    31.         An RSE licensee must advise APRA of any significant problems that have the potential to materially affect the outsourcing arrangement and, as a consequence, materially affect the RSE licensee's business operations, the interests of beneficiaries, or materially affect any of the RSEs or connected entities of the RSE licensee.

    32.         Where an outsourcing agreement is terminated, an RSE licensee must notify APRA as soon as practicable and provide a statement about the transition arrangements and future strategies for carrying out the outsourced material business activity.

Audit arrangements
    33.         An RSE licensee's internal audit function must review any proposed outsourcing of a material business activity and regularly review and report to the Board or Board Audit Committee on compliance with the RSE licensee's outsourcing policy. Where APRA has exempted an RSE licensee from having a dedicated internal audit function, or approved alternative arrangements under Prudential Standard SPS 510 Governance, APRA may also vary the requirements of this paragraph.

    34.         APRA may request the external auditor of an RSE licensee, or an appropriate external expert, to provide an assessment of the risk management processes in place with respect to an arrangement to outsource a material business activity. This could cover areas such as information technology systems, data security, internal control frameworks and business continuity plans. Such reports will be paid for by the RSE licensee and must be made available to APRA.

Transitional arrangements
    35.         Paragraphs 29, 36 and 37 of this Prudential Standard commence on the date of registration of this Prudential Standard on the Federal Register of Legislative Instruments (registration date).

    36.         An RSE licensee must ensure that, when entering into an outsourcing arrangement covered by this Prudential Standard and from the day after the registration date, it complies with paragraphs 20 to 28 inclusive.

    37.         Where