Approach to non-executive directors in banking and Solvency II firms & Application of the presumption of responsibility to Senior Managers in banking firms

Consultation Paper 7/15
Published on 23 February 2015

Background

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:

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:

  • Chairman;
  • 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.

Responses

This consultation closed on 27 April 2015.

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.

PDFConsultation Paper 7/15

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