FSA consults on effective governance standards within firms – follow-up on Walker review
29 January 2010
The FSA is consulting on extending the scope of the significant influence functions (SIF) regime and introducing a detailed framework of controlled functions. This will make clearer the role an individual is performing within a firm and increase the FSA’s ability to track individuals as they move role.
As part of its supervisory enhancement programme, the FSA is placing greater emphasis on the role of senior management within firms. Since adopting this approach in 2008, the FSA has carried out 332 significant influence functions (SIF) interviews, with 25 candidates withdrawing from the process.
The FSA has issued a number of publications in this area, including a ‘Dear CEO’ letter in October 2009, clarifying its approach to approving and supervising persons performing SIFs. This CP explains the more intensive process in greater detail, but also makes clear that the intention is not to deter strong candidates from pursuing senior roles in firms.
Graeme Ashley-Fenn, FSA’s Director of Permissions, Decisions and Reporting, said:
"Our more intrusive approach continues to place a great deal of emphasis on governance and therefore the senior management at firms. This starts with a firm’s own due diligence. Our experience shows that once a firm gets its corporate governance right; with a strong and effective board, everything else flows from that."
The proposals implement the FSA-specific recommendations laid out in Sir David Walker’s review of corporate governance published in November last year. Where appropriate, listed banks and insurers are now strongly encouraged to establish board risk committees and appoint top executives as chief risk officers.
Underpinning this intrusive approach, today’s paper consults on extending the scope of the (significant influence functions) SIF regime and introduces a new, more detailed framework of controlled functions. These will make clearer the exact role an individual is performing within a firm and increases the FSA’s ability to vet and track individuals as they move role. The FSA is also extending the regime to capture more individuals from parent companies who exert significant influence upon a UK regulated firm.
The deadline for comments is 28 April 2010.
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