Published on 31 March 2016
Corporate governance: Board responsibilities – PS13/16
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.
Published on 21 May 2015
Corporate governance: Board responsibilities - CP18/15
This consultation paper seeks views on a draft supervisory statement which draws on the Prudential Regulation Authority’s (PRA) regulatory experience to identify some key issues for boards to consider, and to which the PRA pays close attention in the conduct of its supervision. It is not intended to be a comprehensive guide to good corporate governance.
The consultation paper is relevant to all PRA-regulated firms.
The draft statement underscores the collective responsibilities shared by board members, and as such, complements the individual accountabilities which the PRA is introducing through the Senior Managers and Senior Insurance Managers Regimes. It provides guidance on the PRA’s expectations relating to:
- Setting strategy
- Risk appetite and risk management
- Board composition
- The respective roles of executive and non-executive directors
- Knowledge and experience of non-executive directors
- Board time and resources
- Management information and transparency
- Succession planning
- Subsidiary boards
- Board committees
The consultation closed on 14 September 2015.