This consultation sets out the Prudential Regulation Authority’s (PRA) and Financial Conduct Authority’s (FCA) revised approach to non-executive directors (NEDs) in UK banks, building societies, credit unions and PRA-designated investment firms (collectively relevant authorised persons) and Solvency II firms.
Summary of proposals
The regulators’ revised approach takes into account feedback to the consultation on Strengthening accountability in banking: a new regulatory framework for individuals –CP14/14 published in July 2014 (the July 2014 CP), which expressed concern about the proposed approach to NEDs under the Senior Manager’s Regime (SMR) as set out in the CP.
The consultation also builds on previous consultations on individual accountability:
- the PRA’s consultation on the Senior insurance managers regime: a new regulatory framework for individuals – CP26/14;
- the PRA’s and FCA’s joint consultation on Strengthening accountability in banking: forms, consequential and transitional aspects – CP28/14.
Under the revised approach, the PRA and FCA will only make the following NEDs in relevant authorised persons subject to pre-approval and inclusion in the SMR:
- Chair of the Risk Committee;
- Chair of the Audit Committee;
- Chair of the Remuneration Committee;
- Chair of the Nomination Committee; and
- Senior Independent Director.
Other proposals in this consultation:
- the approach to NEDs in the pre-approval and individual accountability regime for Solvency II firms;
- the PRA’s proposed fitness and propriety and notification requirements and conduct standards for those NEDs in relevant authorised persons who will not be in scope of the SMR (Standard NEDs);
- a PRA supervisory statement clarifying the role and responsibilities of NEDs within scope of the SMR and how the PRA intends to apply sections 66B (5) and (6) of FSMA.
This consultation closed on 27 April 2015. Please send comments and enquiries to:
The PRA and FCA will share and consider together the feedback received and will publish policy statements with the final rules at a later date.
Approach to non-executive directors in banking and Solvency II firms & Application of the presumption of responsibility to Senior Managers in banking firms – CP7/15
Final policy in relation to this consultation is available under related links.