On 28 January 2010 the FSA issued a consultation paper on effective governance, focusing on significant influence controlled functions and Sir David Walker's review of corporate governance in banks and other financial firms.

The FSA's proposals will establish a revised framework of classification of significant influence controlled functions. One proposal is the sub-division of the NED (non-executive director) governing function by adding sub-categories for the chairman, senior independent director, chairman of the risk committee, chairman of the audit committee and chairman of the remuneration committee. The proposals will also create a new function for individuals within an unregulated parent entity who exercise significant influence over the regulated entity. The FSA has also reversed a previous consolidation of the three systems and controls functions (finance, risk and internal audit) so that each becomes a separate function once more.

The FSA intends to transition individuals who are currently approved as NEDs or under the combined systems and control function by asking firms to complete a notification form. This notification will not trigger a fresh assessment of the competence of the individual unless an individual who currently holds a governing function is required to apply for approval to hold one of the new systems and control functions.

The consultation paper also contains some helpful information on the FSA's approved person and significant influence function interview process.

The consultation paper can be found by clicking here. Responses should reach the FSA by 28 April 2010.