FCA and PRA publish Strengthening Accountability - A new Senior Managers Regime
This week the PRA and FCA have jointly published CP14/13, their clampdown on Banks and other significant institutions, including banks, building societies, credit unions, and PRA designated investment firms. Key proposals include:
*A new ‘Senior Managers Regime’ (SMR) for individuals who are subject to regulatory
approval, which will require firms to allocate a range of responsibilities to these individuals
and to regularly vet their fitness and propriety. This will focus accountability on a narrower
number of senior individuals in a firm than the current Approved Persons Regime (APR).
*A ‘Certification Regime’ which will require relevant firms to assess the fitness and propriety
of certain employees who could pose a risk of significant harm to the firm or any of its
*A new set of ‘Conduct Rules’.
One of the key implications is the widening of the net for influencers from other group/parent entities, whether regulated or not, and including them in the SMR. For dual regulated firms a definite 'catch-all'. Full details here... FCA PRA
FRC's Chairman welcomes new Institute of Business Ethics... and other FRC news
Sir Win Bischoff, Chairman of the Financial Reporting Council, spoke at the launch of the Institute of Business Ethics (IBE) last week. His key messages were:
"Companies must not think of ethics and culture as some sort of compliance exercise. Getting appropriate processes and controls in place is important, but will not by themselves embed the right values and culture. That requires vigilance by the board, and a lot of thought. The IBE paper is a helpful prompt for that.
"It is essential that boards lead by example and set the tone at the top in order to influence the behaviour of management and staff. That leadership must come, in particular, from the Chairman and Chief Executive, who need to be seen to live the values they espouse and to be very clear about any practices for which there is zero tolerance. The CEO, with the support of the executive team, has responsibility for setting an example to the company’s employees, and communicating to them the expectations of the board in relation to the company’s culture, values and behaviours."
Particular reference to governance below board level and the role of Internal Audit was also made:
"But, reflecting on what I said about change needing to come from within the company itself, we have perhaps not placed enough emphasis on governance below board level and the important role played by, for example, internal audit in providing assurance to the board.
"Don’t panic – I am not proposing a new code on internal governance! There are others better placed than the FRC to advise on good practice, such as the Chartered Institute of Internal Auditors who have recently produced a report on the role of internal audit in promoting the right culture. Philippa Foster Back from the IBE provided the foreword to that report, and I quote her:
“Internal audit… can provide confidence that there is a strong commitment to good conduct and that it is actually being translated into everyday behaviours, but also, more importantly, where it is not.”
A speech well-worth reading in full... more here...
Also from the FRC - The UK Corporate Governance Code consultation period has now closed with several public statements around concerns that proposed changes to the Code will water down directors accountability. The FRC final announcement on changes is expected by October.
Meanwhile the FRC also launched its Annual Report this month highlighting its achievements and challenges. Read here...
Junker proposes creation of EU financial services directorate
With the tricky wading through treacle that we are already faced with on EU regulation this could have a massive impact on UK financial services if it comes into being. Definitely one to watch!
FSTP Global awarded Leadership Potential Development Company 2014
We're delighted to have the work we've done on our leadership, board-ready programmes and Board briefings/programmes recognised in the Business Excellence Awards 2014. A big thank you to all of our clients and supporters who voted for us. More details here...
Leadership for the future
If you, or a member of your team, would welcome enhancing your Board-level skills our Board-ready Leadership programme has relevant and interesting modules spread over 3 months this Autumn, including Making Smarter People Decisions and Board Influence. Based on what we see from the best Board members and what we see lacking in skill sets during our Board evaluations, the programme is designed to assist executives thrive at the top in our heavily regulated world. Talk to us if you would like to know more, or read our brochure here...
We are in the process of developing an extended range of Board-related programmes and briefings for businesses to run in house. Our particular focus will be on Committees, which is of particular interest to both the PRA and FCA, including the role of Non-executive Directors.
CPD Programme - Autumn 2014
Our popular open CPD briefings for senior executives continue with the following:
Better Board Reporting - 16 September
Directors' Guide to Surviving a PRA/FCA Visit - 30 September
SIF Roles - Your Senior Management Responsibilities (FCA) - 7 October
The Role of the Board in Risk Management - 14 October
Culture and Ethics - 11 November
Ensuring your Audit Committee is Effective - 25 November
Good Governance - 9 December
More information here...
If you would rather have an in-house briefing or something specifically tailored for your needs, whether one briefing or a whole programme of Board briefings, please just contact us. Details at the bottom of the newsletter.
Board Development - Autumn 2014
Award-winning FSTP Global's Board-ready Leadership Programme - starts 24 September (5 days over Sep/Oct/Nov) More here... Also available in-house as a programme or separate modules.
Do let us know what else you would like to see in our Board and senior executives briefing schedule in future.
Until next time...
FSTP Global Ltd
020 7764 0721 (new phone number)