Andrew Bailey, PRA Chief Executive and Bank of England Deputy Governor for Prudential Regulation gave a speech on 3 November 2015 on governance and the role of boards in banks, insurers and major investment firms.

Key points from his speech include:

  • No consensus on how to set boards’ expectations in order to set firms’ strategy, risk appetite and implementation.
  • Boards are expected to exercise good judgement in overseeing the running of a firm which must be forward-looking.
  • Non-executive directors (NEDs) are expected to mentor, coach and challenge executives in firms’ strategy.
  • Executives must be able to explain complex matters to NEDs in simple and transparent terms, provide good management information and enable challenge from NEDs.

A supervisory statement identifying key aspects of good board governance is expected to be published by the PRA soon.