29 August, 2023, saw the promulgation of the Act of 16 August 2023 amending Certain Laws to ensure Growth of the Financial Market and Protect Investors on that Market. This act, dubbed the Warzywniak – General Store act, amends several dozen legislative acts on issues such as the rules governing the functioning of the financial market, in particular Poland’s banking, payment, capital, and insurance markets. An amendment to the Banking Law of 29 August 1997 is particularly noteworthy. This makes changes to laws on outsourcing in the banking sector.
One of the major changes concerning outsourcing in the banking sector is that it is possible to form an “infinite” outsourcing chain. This makes it possible to enter into outsourcing agreements with multiple subcontractors at various levels in the chain, with the bank’s knowledge. The amendment also provides that prior written consent from the bank, specific or general, is required for an insourcer to assign tasks further.
Another major change under the General Store act is that instead of the obligation (applicable to date) to obtain Financial Supervision Authority clearance for cross-border outsourcing (to third countries), there is now an obligation to give the Financial Supervision Authority prior notification of plans to enter into an outsourcing agreement with an undertaking or foreign undertaking. At the same time, banks are required to notify the Financial Supervision Authority whenever there is a major amendment, termination, or expiry of outsourcing agreements, where notification of conclusion of those agreements was submitted before. Under the amendment, the Financial Supervision Authority has been given the power to issue to a bank an administrative decision objecting to conclusion of a cross-border outsourcing agreement. In addition, rules on “outsourcing between regulatory institutions” have been relaxed. Under these rules, there is no obligation to notify the Financial Supervision Authority of outsourcing if tasks are contracted to another bank or another payment service provider in the meaning of art. 4(2) of the Payment Services Act.
The changes mean that it is also possible to limit an insourcer’s liability towards a bank for loss suffered by bank customers as a result of failure to perform or improper performance of an agreement on outsourcing or on further outsourcing. Meanwhile, banks will have an obligation to ensure that appropriate safeguards are in place to cover any costs of compensation that may arise due to claims raised by customers or third parties for redress of the loss.
Most of the provisions in the General Store act will take effect on 29 September 2023, and for this reason there is little time remaining to review the new legislation.
Author: Prof. UEK Jan Byrski, PhD, Habil.