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FSA to extend SIF regime

The FSA has published proposals that extend the significant influence function regime to apply to more individuals and increase the FSA’s powers to vet and track people as they move role.

The regulator has today issued a consultation paper on effective governance standards within firms.

The FSA plans to introduce nine new significant influence controlled functions including chairman, chairman of risk committee, chairman of audit committee, chairman of remuneration committee, senior independent director, parent entity SIF, finance function, risk function and internal audit function.

It is also consulting on extending the regime to capture more individuals from parent companies who exert significant influence upon a UK regulated firm.

The FSA is proposing transitional arrangements that will see firms submit notification to the regulator identifying which of their approved persons are performing any of the new controlled functions already, within their existing approvals. It says it will not use the notification process to assess the competence of individuals to perform the roles.

FSA’s director of permissions, decisions and reporting Graeme Ashley-Fenn says: “Our more intrusive approach continues to place a great deal of emphasis on governance and therefore the senior management at firms.

“This starts with a firm’s own due diligence. Our experience shows that once a firm gets its corporate governance right, with a strong and effective board, everything else flows from that.”

Following on from Sir David Walker’s review of corporate governance, published in November last year, the FSA says listed banks and insurers are now strongly encouraged to establish board risk committees and appoint top executives as chief risk officers.

FSA managing director of risk Sally Dewar says: “We have been very clear about our more intensive supervisory approach of firms and individuals and our renewed focus on the quality of governance.  

“We were fully supportive of Sir David’s recommendations and this CP sets out how we intend to deliver them through our ongoing supervisory work and authorisation processes.”

The consultation period closes on April 28, 2010. The FSA says it hopes to have final rules in place during the third quarter of 2010.   


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