Corporate Governance

The FSA has issued Consultation Paper CP10/03: ‘Effective corporate governance’. As we all know, the FSA places considerable emphasis on good corporate governance and is a subject matter that can be guaranteed to feature in the planning of an ARROW visit.

The proposals, which need to be considered by most (if not all) firms, include the introduction of 6 new controlled functions and the return of CF13 (Finance function); CF14 (Risk function); and CF15 (Internal audit function) in place of CF28 (systems and controls). There will also be the removal of some exemptions enjoyed by firms in general and LLPs specifically.

The consultation period ends 28 April and the FSA hopes to issue the new rules in Q3. Although the CP does suggest some transitional arrangements in order to give firms time to consider the impact of the proposals in the light of their organisational structure, firms may wish to turn their thoughts to CP10/3 now.

We have prepared a summary of the proposals contained within CP10/3 which can be accessed via the link below.

The proposals in CP10/03 relate to the ‘significant influence controlled functions’, which are basically all the controlled functions except CF30 ‘the customer function’.

However CF30 doesn’t completely escape as a separate consultation paper – CP10/02 ‘Mortgage Market Review – Arrears and Approved Persons’ – proposes introducing a new customer function (CF31). This will only be of relevance to home finance business but a consequence of this CP is that CF30 will be renamed ‘customer function (designated investment business)’. This consultation ends 30 April with final rules being published in June.