The FSA has published a speech given by Sally Dewar (Managing Director, Risk, FSA) which is entitled Taking the FSA's corporate governance agenda forward.
At the start of her speech Dewar states that whilst poor governance was only one of the many factors that contributed to the financial crisis, it was an important one.
She added that the FSA’s emphasis now "is on supervising governance in action - and that means evaluating the outcomes of the processes and structures firms have put in place and greater scrutiny of individuals before they are in positions of influence, and once they are in place."
In October 2008 the FSA decided to incorporate an interview into its process for assessing the competence and capability for key roles within firms. Since then, it has interviewed over 300 applicants for approved persons roles. In her speech Dewar discusses the four stages of the interview process being:
- The firm's application. Dewar states that the FSA continues to find that many firms fail to conduct adequate due diligence on their candidates or make sensible judgements on their suitability, resulting in delays and more intensive FSA investigations.
- The FSA's assessment of the application. The FSA’s starting point is the ‘fit and proper’ test that sets out the minimum standards required of an approved person.
- The interview. Dewar states that at the core of the process the onus lies with the firm to do proper due diligence on their candidates, and to show the FSA that their chosen appointee is fit and proper for the role.
- Ongoing FSA review once approved. The performance and competence of persons performing significant influence functions is reviewed as part of the ARROW assessment. Where the FSA has serious concerns about the corporate governance of a firm it can instigate a section 166 report to independently review the firm.
In respect of Financial Reporting Council’s (FRC) adoption of the Stewardship Code Dewar states that the FSA will bring forward its proposals to introduce an appropriate disclosure regime to support the code once the FRC has completed its work.
View Taking the FSA's corporate governance agenda forward, 30 March 2010