The FSA published CP10/3 entitled “Effective corporate governance (significant influence controlled functions and the Walker review)” in January 2010 (http://www.fsa.gov. uk/pubs/cp/cp10_03.pdf). This is of interest to all regulated financial institutions and may also affect their parents. The FSA recognises that its focus on the quality of governance and the intensity of its previous supervisory assessment of it did not adequately reflect its importance. CP 10/3 outlines initiatives which are intended to correct this. The consultation closes on 28 April 2010. Final rules are expected during Q3 2010.

  1. Changes to the approved persons regime  
  • Introduce nine new controlled functions deemed critical to delivering effective corporate governance and which are currently subsumed within other significant influence controlled functions.
  • Extend the parent entity significant influence controlled function.
  1. Walker Review The FSA has made a number of proposals in relation to non-executive directors, the governance of risk, and shareholder engagement, which implement some of Sir David Walker’s final recommendations (http://www.hm-treasury.gov.uk/d/walker_review_261109.pdf). The consultation paper does not include any new policy proposals on remuneration.
  2. Approved persons interviews The FSA is not consulting on the approval process, but is using the consultation paper to provide further information on the interview process and the level of vetting of candidates expected of firms. Our publication can be found at http://www.herbertsmith.com/NR/rdonlyres/F38259EDABDC-450C-8257-18EA0CC4A0E0/14277/Effectivecorporategovernancev2.htm.