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The Warsaw Voice » Law » November 25, 2011
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Facilitation of Outsourcing
November 25, 2011   
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Why is it important?
Banks and their employees are obliged to maintain banking secrecy, which extends to all information concerning banking operations. The scope of bank secrecy is very broad and includes, in particular, all personal data of a bank’s customer. Such data cannot be disclosed to anyone unless the law states otherwise. The Banking Law lists all entities that are not subject to this prohibition. These include the outsourcing partners of the bank, which are external entities, independent from bank’s internal organizational structure, entrusted by the bank on the basis of a written agreement to:
- act for and on behalf of the bank in banking operations, or
- conduct banking operations.

However, in practice, due to highly formalized procedures for concluding outsourcing agreements, both banks and contractors have been reluctant to conclude such agreements, striving at all costs to provide services outside the outsourcing system.

Amendment of the Banking Law

This may change with a new law that entered into force on Oct. 27, 2011, amending the Banking Law, which is aimed in particular at de-formalizing the bank outsourcing procedures.

The main changes include:
- removing the obligation to notify the Financial Supervision Authority in advance about the intention to conclude an outsourcing agreement at the national level, as well as about the modification, termination or expiry thereof;
- introducing an obligation for banks to keep records of outsourcing agreements;
- introducing the possibility to outsource activities to civil partnerships, and
- introducing a clear possibility of sub-outsourcing.

The abolition of notification and reporting duties of the banks towards the Financial Supervision Authority (“FSA”) has to be considered a major liberalization of the provisions on outsourcing. Before the law amendment, banks were obliged to notify the Financial Supervision Authority at least 14 days in advance of concluding an outsourcing agreement (except for cross-border outsourcing agreements, subject to the permit of the Financial Supervision Authority) and they had to notify the FSA within 14 days of the modification, termination or expiry of the outsourcing agreement.

The new law replaces the obligation to notify the Financial Supervision Authority with the obligation for banks to keep records of such contracts. It also abolishes the obligation to notify the Financial Supervision Authority about the modification, termination or expiry of outsourcing agreements.

The amended law also enlarged the subjective scope of the definition of an “enterprise” provided in the Banking Law, allowing civil partnerships to become parties to outsourcing agreements concluded with banks.

One of the most important changes is the introduction of new provisions on sub-outsourcing. Although the existing provisions did not explicitly forbid contractors of the bank from using subcontractors when performing the outsourcing agreements, the Financial Supervision Authority was seen as skeptical about such practices. This was due to the fact that this issue is connected with providing such entities with access to information covered by banking secrecy, which used to be permitted only to the party of the outsourcing agreement concluded with the bank. The amendment has clarified this issue, and the list of entities authorized to access confidential information has been expanded.

However, sub-outsourcing is now permitted in two situations only. Firstly, where this is regulated in the agreement between the bank and the initial contractor as an activity used for the performance of the main service under the agreement, and where the bank approves a given sub-contractor. Otherwise, sub-outsourcing is admissible on a one-off basis in emergency situations where the contractor is unable to perform the entrusted activities itself due to force majeure. However, this situation must be reported to the FSA.

Conclusions

In a rare occurrence, the amendment of the provisions on bank outsourcing has been positively received by all interested entities. It should be emphasized that, without reducing the security of trading or excessively enlarging the circle of entities that have access to confidential information, the amendment has managed to significantly simplify and de-formalize the institution of bank outsourcing, which, combined with the new provisions on sub-outsourcing, should have a positive effect on the number of agreements concluded in this area.

Mateusz Gronau, lawyer, Gide Loyrette Nouel

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