Non Executive Directors - FSA Approved Persons. 

Implementation of these changes was due from 1st May 2011 but have not been delayed.  Click here for further information.

Do you have Non Executive Directors appointed to your Board?

Are they ready to apply for Approval by the FSA? 

If you require assistance in reviewing your appointment of Non Executive Directors and their responsibilities, contact Insynergi on 01672 514487.

The new changes, when implemented, require anyone who is appointed as a Non Executive Directors of an authorised firm to be approved for the controlled function of CF2 (see the Policy Statement PS10/15 Effective Corporate Governance following the Walker Review and proposals on changes to approved persons roles in a previous consultation paper CP10/03 issued in January 2010).

The following summary sets out changes to the approved persons’ roles to be implemented. It does not include the FSA’s approach to interviewing candidates for approval, and is not intended as individual guidance for any firm.

Where a Non Executive Director performs any of the following specific roles, he/she will require additional approval for one of 5 new functions. The paper sets out expectations of experience, liability and commitment. The FSA has avoided prescription of the number of days worked as Walker had suggested 30 days or more for larger firms. But the FSA does expect Non Executive Directors to work sufficient days as to be able to make informed comment on the business upon which they will have been independently briefed.

The 5 new roles are as follows:

1.  Chairman – CF2a

2.  Senior independent director – CF2b

3.  Chairman of risk committee – CF2c

4.  Chairman of audit committee – CF2d

5.  Chairman of remuneration committee – CF2e

Additional points to note:

• The FSA will usually only expect to see a Non-Executive Director approved for roles CF2a-e
• The FSA had considered deleting relevant guidance within SYSC regarding the responsibilities of Non Executive Directors' in relation to potential disciplinary action. However due to concerns raised at consultation whether this would increase the liabilities of Non Executive Directors', guidance has remained (predominately at SYSC 4) although the wording has been amended
• The FSA also considers that Non Executive Directors must be able to commit appropriate resources to any such appointment. New guidance at FIT (2.2.1) covers this and also that the FSA may review the firm’s process in assessing this

If you require assistance in reviewing your business and Non Executive Directors, contact Insynergi on 01672 514487.

Insynergi (UK) Limited is a member of the Association of Professional Compliance Consultants (APCC) and the Financial Skills Partnership (FSP).