The FSA has published Consultation Paper 10/3: effective corporate governance (significant influence controlled functions and the Walker review) in order to improve corporate governance in regulated firms. The proposals have been made in the light of the recent review of corporate governance in banks and other regulated firms by Sir David Walker and other international work being done to improve governance.
The proposals in CP10/3 include:
- A new framework of classification of controlled functions. Nine new significant influence controlled functions (comprising six new governing functions and three new systems and controls functions) are proposed in order to capture roles that currently fall within existing significant influence controlled functions. The new controlled functions are: chairman, chairman of risk committee, chairman of audit committee, chairman of remuneration committee, senior independent director (SID), parent entity SIF, finance function, risk function and internal audit function.
- Changes to the approved persons regime. The FSA proposes to extend the approved persons regime to capture more individuals who are based outside a UK-regulated firm but who exercise a significant influence upon the regulated firm.
- Guidance on the FSA’s expectations of non-executive directors (NEDs).