31 March 2016
The
purpose of this supervisory statement is to identify, for the boards
of firms regulated by the Prudential Regulation Authority (PRA),
those aspects of governance to which the PRA attaches particular
importance and to which the PRA may devote particular attention in
the course of its supervision. It is not intended to provide a
comprehensive guide for boards of what constitutes good or effective
governance. There are more general guidelines for that purpose, for
example the UK Corporate Governance Code, published by the Financial
Reporting Council.
As set out in the PRA approach documents,
the
PRA expects the boards and management of regulated firms to run the
business prudently, consistent with the firm’s own safety and
soundness and the continuing stability of the financial system.
Where the collective responsibilities of
directors set out in this supervisory statement relate directly to
individual responsibilities in the PRA’s rules and supervisory
statements underpinning those regimes,
the PRA’s expectations of
firms and the requirements on individuals should be interpreted as
being complementary.
The statement applies generally to
PRA-regulated firms, including, banks, insurers, designated
investment firms, building societies, friendly societies and credit
unions, though it is recognised that different governance models may
apply depending on the nature and size of the firm and any wider
group and that expectations of boards should also be proportionate.
The PRA’s expectations of boards will also be
influenced by the recovery and resolution strategies for the firm or
the group, taking account of the extent to which the PRA would need
to be satisfied that the board of a significant PRA-regulated
subsidiary is constituted and performs in a way that shows that they
are capable of independent action.
See: Corporate governance: Board responsibilities – SS5/16 (Long form) - Bank of England