Prudential Regulation Authority Rulebook

7.1

If a firm outsources a function or any insurance or reinsurance activity, it remains fully responsible for discharging all of its obligations under the rules and other laws, regulations and administrative provisions adopted in accordance with the Solvency II Directive.

[Note: Art. 49(1) of the Solvency II Directive]

7.2

A firm must not outsource a critical or important operational function or activity in such a way as to lead to any of the following:

1. (1) materially impairing the quality of the firm’s system of governance;
2. (2) unduly increasing the operational risk;
3. (3) impairing the ability of the supervisory authorities to monitor the firm’s compliance with its obligations;
4. (4) undermining continuous and satisfactory service to policyholders.

[Note: Art. 49(2) of the Solvency II Directive]

7.3

A firm must, in a timely manner, notify the PRA prior to the outsourcing of critical or important functions or activities as well as of any subsequent material developments with respect to those functions or activities.

[Note: Art. 49(3) of the Solvency II Directive]

7.4

Without prejudice to 7.1 to 7.3, a firm outsourcing a function or an insurance or reinsurance activity must take the necessary steps to ensure that the following conditions are satisfied:

1. (1) the service provider must co-operate with the PRA and, where relevant, any other supervisory authority of the firm in connection with the function or activity that is the subject of the outsourcing;
2. (2) the firm, its auditors, the PRA and, where relevant, any other supervisory authority of the firm must have effective access to data related to the functions or activities that are the subject of the outsourcing; and
3. (3) the PRA and, where relevant, any other supervisory authority of the firm must have effective access to the business premises of the service provider and must be able to exercise those rights of access.

[Note: Art. 38(1) of the Solvency II Directive]