The Prudential Regulation Authority (“PRA”) has recently published a supervisory statement that identifies the key aspects of board governance that PRA-regulated firms should pay attention to, as they are the aspects which the PRA sees as particularly important to proper board governance.
The PRA believes that for companies to achieve good governance in their businesses, it is key that they have an effective board. The PRA’s draft statement points out the responsibilities that all board members should share, but being wise to the notion that ultimately it is the responsibility of the chairman to ensure that the firm’s culture and standards remain at an acceptable standard.
The PRA expects its regulated firms to have an effective board which: has an established business model and strategy; judges whether potential business decisions are desirable or correct from a risk perspective; and are truly cooperative with regulators.
Please see our below handy glance card which sets out the PRA’s twelve expectations for PRA-regulated firms to achieve good board governance, plus some summarised explanatory information:
It should be noted by firms that the PRA does not view its statement to be the only source of guidance on good and bad behaviours for board governance and firms should look to other sources for further guidelines ie. the Financial Reporting Council’s UK Corporate Governance Code.
Feedback to the consultation closes on 14 September 2015.
Please send comments to: CP18_15@bankofengland.co.uk
Please click here to access the full consultation paper.
Should you require any further advice or information on the above, Cleveland & Co, your external in-house counsel, are here to help.