FSA has published a consultation paper on effective governance standards within firms. The paper addresses the recommendations from the Walker review specific to FSA. It highlights the benefits of listed banks and insurers establishing board risk committees and appointing top executives as their chief risk officers. The paper builds on FSA's approach to significant influence functions (SIF) by proposing a new, more detailed, framework of controlled functions. The proposals cover:
- measures that focus on the role individuals in SIFs play in delivering effective governance including separating some key roles from existing functions;
- building on recent changes to the scope of the approved persons regime, with proposals that will catch more individuals outside regulated firms who exercise significant influence over such a firm. New functions would include that of "parent entity SIF", and the CF1 and 2 functions would be split into new sub-categories. There would also be three new systems and controls functions, and FSA is considering extending the CF29 function to UK branches of EEA banks;
- discussion of how FSA vets and supervises individuals carrying out SIF, including how it plans to develop its relationships with NEDs;
- the specific role and responsibilities of NEDs, taking into account FSA's previous consultations and the recommendations from the Walker review, including on the time NEDs and chairmen should devote to their firms; and
- FSA's specific response to the Walker recommendations on risk and stakeholder engagement in firms, specifically listed banks and insurers.
The consultation includes draft new rules. FSA wants comments by 28 April and plans to have final rules in place during the third quarter of 2010. (Source: FSA/PN/015/2010 and Consultation Paper 10/03***: Effective corporate governance (significant influence controlled functions and the Walker Review)