The PRA published a draft supervisory statement relating to those aspects of board governance to which the PRA attaches particular importance. The draft statement complements the individual accountabilities which the PRA is introducing through the Senior Managers and Senior Insurance Managers regime. The paper and draft statement will be of particular interest to board members of all PRA-regulated firms but the PRA recognises that different governance models may apply depending on the nature and size of the firm.

The paper focuses on a range of matters which the PRA considers to be essential elements of an “effective board”. This includes the board’s role in (i) setting the strategy, (ii) the culture, (iii) risk appetite and management, (iv) setting executive and non-executive roles, (v) use of knowledge, experience, time and resources, (vi) succession planning, and (vii) remuneration. The degree of supervisory attention paid to governance issues for particular firms may vary according to the firms’ risk profile and potential impact of failure.

It is not intended that the draft statement is to be treated as a comprehensive guide to “good corporate governance”, but the PRA is mindful that the areas covered by the PRA are vital ingredients in creating an environment of collective responsibilities. The PRA is looking for feedback on the consultation by 14 September 2015. The full text of the consultation paper CP18/15 can be viewed here:http://www.bankofengland.co.uk/pra/Documents/publications/cp/2015/cp1815.pdf.