The Australian Prudential Regulation Authority (APRA) has issued a discussion paper on managing risks from outsourcing. It has also released draft prudential standards and a prudential practice guide on outsourcing.

APRA says in a statement that the standards will “apply a harmonised approach to authorised deposit-taking institutions (ADIs), general insurers and life insurers” in relation to outsourcing.

The standards, which are considered like most financial services laws to be “principles-based”, detail APRA’s minimum requirements for managing outsourcing risks but let institutions “develop their outsourcing policy that meets the principles”. 

The regulator says the new standards are largely based on the existing requirements, but introduce greater flexibility in the approach to intra-group outsourcing and deal explicitly with outsourcing to offshore parties.

APRA says the insurance industry has already been involved in extensive consultation on the proposed standards, and this round of consultation is occurring to obtain views from ADIs and life insurers as well.