6.1 In line with Article 31(3) of MODR (banks) and 274(3)(c) of the Solvency II Delegated Regulation (insurers), all outsourcing arrangements must be set out in a written agreement.

6.2 Where there is a master service agreement that allows firms to add or remove certain services, each outsourced service should be appropriately documented, although not necessarily in a separate agreement.

6.3 Firms should ensure that written agreements for non-material outsourcing arrangements include appropriate contractual safeguards to manage and monitor relevant risks. Moreover, regardless of materiality, firms should ensure that outsourcing agreements do not impede or limit the PRA’s ability to effectively supervise the firm or outsourced activity, function, or service.

Material outsourcing agreements

6.4 Written agreements for material outsourcing should set out at least:

• a clear description of the outsourced function, including the type of support services to be provided;

• the start date, next renewal date, end date, and notice periods regarding termination for the service provider and the firm;

• the governing law of the agreement;

• the parties’ financial obligations;

• whether the sub-outsourcing of a material function or part thereof is permitted and, if so, under which conditions;