FSA Managing Director Sally Dewar highlighted, at the City corporate governance and remuneration Summit, that the FSA’s objective on corporate governance is to make regulation more effective and reduce the likelihood of a future crisis.
FSA Managing Director Sally Dewar highlighted, at the City corporate governance and remuneration Summit, that the FSA’s objective on corporate governance is to make regulation more effective and reduce the likelihood of a future crisis.
FSA needs to change the focus and look closer at behaviour and culture in firms, particularly ensuring two key things:
· that good culture and behaviours in firms is being driven by senior management; and
· that good culture and behaviours are being reinforced by effective corporate governance and the role of the boards.
In October 2008, FSA decided to incorporate an interview into the process for assessing the competence and capability of candidates for key roles. Since then, FSA has interviewed over 300 applicants for approved persons roles.
There are four stages to go through:
· Stage 1 – The firm’s application
It is the firm that remains responsible for making the application to the FSA for approval of a candidate. A key part of that responsibility is the need for firms to assess the fitness and propriety of candidates thoroughly before proposing them for an approved person role.
· Stage 2 –FSA assessment of the application
FSA starting point is ‘fit and proper’ test that sets out the minimum standards required of an approved person.
· Stage 3 – The interview
FSA covers a range of issues – these include the candidate’s competence, assessed against criteria such as market knowledge, risk management and control, and governance and oversight. FSA does not apply a one-size fits all approach to this assessment – our expectations for each candidate will vary according to a range of factors, such as our view of the firm, the balance of the board or team that the individual is joining, and so on.
· Stage 4 – Once approved, ongoing review
Once approved, the performance and competence of persons performing SIFs will be reviewed as part of ARROW assessments.
She concluded saying that “FSA work aims to respond to the lessons we have learned from the financial crisis and to make our regulation more effective to reduce the risk of the same problems happening again. It goes alongside our other prudential work – on capital, liquidity and stress testing, and it is part of our more intensive approach.”
© FSA - Financial Services Authority
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