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PRA issues supervisory statement on good board governance for PRA-regulated firms

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31 Mar 2016

The Prudential Regulation Authority (PRA) has published a supervisory statement which identifies some key aspects of good board governance for boards to consider to which the Prudential Regulation Authority (PRA) attaches particular importance and pays close attention to in the course of its supervision.

The PRA consulted on a draft supervisory statement in May 2015 and, concurrently with publishing the supervisory statement, has also issued a policy statement which sets out responses to feedback received on the May consultation.

Consistent with the May consultation paper CP 18/15 Corporate Governance: Board responsibilities, the supervisory statement is relevant for all PRA-regulated firms and provides guidance on the PRA’s expectations relating to:

  • Setting strategy;
  • Culture;
  • Risk appetite, risk management and internal controls;
  • 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;
  • Remuneration;
  • Subsidiary boards; and
  • Board committees

The PRA indicates that the supervisory statement “is not intended to provide a comprehensive guide for boards of what constitutes good or effective governance”.  It indicates that such guidance is contained within other sources such as the Financial Reporting Council’s UK Corporate Governance Code and the Corporate Governance Principles for Banks, published by the Basel Committee on Banking Supervision. 

The policy statement PS13/16 Corporate Governance: Board responsibilities and supervisory statement SS5/16 Corporate Governance: Board responsibilities are available on the PRA website.

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