Review of the outsourcing policy for registered banks

Release date

20/09/2017

Status: Closed

Timing: Changes in force from 1 October 2017.

Consultation period: 2015 - 2017

20 September 2017

The Reserve Bank has published the final revised outsourcing policy for locally incorporated registered banks as a new Banking Supervision Handbook document “Outsourcing Policy” (BS11) (PDF 252KB) dated September 2017. This follows two rounds of public consultation on the policy content and then a separate consultation on the wording of the exposure draft. The Reserve Bank has also published individual submissions to the exposure draft submission and a feedback statement which summarises submitters’ key points and the Reserve Bank’s responses.

The new policy will take effect from 1 October 2017. Affected banks will have two years before they must fully comply with the requirement to maintain a compendium of outsourcing arrangements and five years to fully comply with other aspects of the policy. The Reserve Bank expects to have a high level of engagement with banks in the interim as they work towards compliance. As of 1 October, the 2006 version of the Outsourcing Policy will be superseded. However, any bank that is subject to the Outsourcing Policy as at 30 September 2017 will continue having to meet any relevant requirements of the 2006 version of the policy for a transitional period of 5 years, as well as meet the requirements of the September 2017 version of the policy.

The revised BS11 is accompanied by other documents. These can be found in the links below.

Submissions for publication (exposure draft consultation)

28 March 2017

The Reserve Bank has added a Word version of the exposure draft to assist submitters providing feedback.

Exposure draft for consultation (DOC 260KB)

21 March 2017

Following the release of final policy decisions on 2 February 2017, the Reserve Bank has today published an exposure draft for public consultation before the revised policy is finalised.

The Reserve Bank would like to hear of any instances where stakeholders believe the wording of the exposure draft is unclear, could be interpreted in more than one way, or differs in substance to what is set out in the final policy decisions document. The Reserve Bank will consider any concrete drafting suggestions made by submitters that are aimed at clarifying the wording of the policy. However, submitters should keep in mind that the substance of the revised policy has been finalised and that the Reserve Bank is not seeking feedback on the policy decisions that have been made.

2 February 2017

In 2015 and 2016, the Reserve Bank ran public consultations about proposed changes to the outsourcing policy in the Banking Supervision Handbook.

The Reserve Bank has made its final policy decisions, and today published documents outlining the final policy decisions, a summary of the submission feedback to the two consultations, and a regulatory impact statement.

23 May 2016

The Bank published a second consultation document on its review of the outsourcing policy for registered banks. The consultation closed on 12 August 2016. The consultation proposed to retain the objectives of the existing policy and supports banks’ continued use of outsourcing arrangements, but made changes to some of the policy proposals in the 2015 consultation paper, including:

Requiring banks to have a robust back-up arrangement on key functions they want to outsource;
Retaining the existing threshold for the outsourcing policy;
A definition of basic banking services; and
Extending the transitional path to compliance to 5 years.

Second consultation document: Review of the outsourcing policy for registered banks (PDF 214KB)

26 August 2015

The Bank published a consultation document on potential changes arising out of the review of the outsourcing policy for registered banks. The consultation closed on 4 December 2015. The consultation proposes to retain the objectives of the existing policy and supports banks’ continued use of outsourcing arrangements, but also proposes to update the objectives to better align with Open Bank Resolution and to provide more clarity on the policy. The main changes relate to:

requiring an explicit requirement for a separation plan for subsidiaries of foreign-owned banking groups;
setting out a list of functions that are not relevant for the outsourcing policy or cannot be outsourced;
setting out a clear process for obtaining non-objection from the Reserve Bank for outsourcing proposals;
requiring a compendium of outsourced functions; and
possibly aligning the application of the outsourcing policy with OBR.

First consultation document: Review of the outsourcing policy for registered banks (PDF 217KB)

Submissions for publication (policy consultations)

The Reserve Bank is also publishing the individual submissions received. In the list below, responses to the 2015 consultation are marked as round 1, while responses to the 2016 consultation are marked round 2.