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Home > Prudential Regulation Authority > Corporate governance: Board responsibilities – PS13/16

Corporate governance: Board responsibilities – PS13/16

31 March 2016

This Prudential Regulation Authority policy statement sets out responses to feedback on Consultation Paper 18/15 and includes a final supervisory statement on board responsibilities (Supervisory Statement (SS) 5/16). It is relevant to all PRA-regulated firms.

Good governance is critical to delivering a sound and well-run business: and at the centre of good governance is an effective board. The first responsibility for maintaining the safety and soundness of a bank, insurance company or any other regulated firm lies with the board. Failures of governance or the management of risk by boards have been a key factor in many of the major financial sector failures of recent years. It is axiomatic therefore that the PRA has a major interest in promoting good governance across the financial sector and supporting the work of boards in delivering it.

SS5/16 draws on the PRA’s regulatory experience to identify some key issues for boards to consider, and to which the PRA pays close attention when exercising forward-looking judgement in the conduct of its supervision. However, it is not intended to be a comprehensive guide to good corporate governance; there are other sources for that, including the Financial Reporting Council’s Corporate Governance Code. Nor does it replace the exercise of supervisory judgement in respect of the size, nature and circumstances of the firm concerned.

SS5/16 underscores the collective responsibilities shared by board members. As such it complements the individual accountabilities which the PRA has introduced through the Senior Managers and Senior Insurance Managers Regimes. See Related links for the PRA’s dedicated webpages on ‘Strengthening accountability’.

Corporate governance: Board responsibilities – PS13/16