The FCA has agreed to a programme of annual reviews on the effectiveness of its board following a damning report from MPs.
The Treasury select committee slammed the regulator as “dysfunctional” in a March report that criticised its handling of a review into closed-book policies last year.
In a response to the report published this week by the committee, the FCA agreed to a demand for a review of the effectiveness of its board’s role in oversight, identification and management of risk.
The FCA says: “The board agrees that as a matter of good corporate governance it is important that its effectiveness is regularly reviewed, and has agreed it will do so on an annual basis.”
The FCA has already commissioned a report from Tracy Long, founder of Boardroom Review, which provides independent advice on the effectiveness of boards and committees, with results expected later this year.
The FCA says: “The board has further decided to commission an external review every other year, with an internal review taking place in alternate years.”
The committee also called for the FCA to hold itself, as far as possible, to the same principles expected of banks in transparency around leadership through the senior manager’s regime.
To that end, the FCA has agreed to publish “responsibility maps” for senior managers.
Additionally, ongoing suitability of senior executives will be assessed annually through the FCA’s performance management framework.
TSC chairman Andrew Tyrie welcomed the moves, but describes the FCA’s response as “overdue”.
He says: “The committee recommended – among other things – that the FCA should carry out investigations into its standards and culture, its communication methods and the board’s effectiveness.
“It is welcome that the FCA now appears to have accepted the need for this. In particular, the FCA’s work to identify the individual responsibilities of its own senior managers and to clarify lines of accountability is a step in the right direction – an overdue one.”