UK: significant influence functions and the Walker Review

In January 2010, the Financial Services Authority published CP10/3: Effective corporate governance (Significant influence controlled functions and the Walker Review), a consultation paper that contained proposals designed to implement relevant recommendations from Sir David Walker's review of corporate governance in banks and other financial institutions as well as improve the governance of regulated firms and the intensity of the FSA's supervisory regime.

The FSA published its response to this consultation last Friday and outlined the actions it proposes to take: see its policy statement available here (pdf). Chapter 3 of the statement provides further background concerning the FSA's work assessing candidates for significant influence functions (e.g., directors). It is worth noting the further clarification provided by the FSA regarding its work in this area, including the following:

... we focus on the competencies and capabilities of individuals, in parallel with our taking a view on an individual’s role in relation to the wider composition of the governing body. Such an approach will, we believe, help to allay concerns that our focus on experience and qualifications could increase the conformity and homogeneity of individuals at the top of the UK financial services industry, with the risk that levels of challenge and alternative points of view are reduced ... For each interviewee, we examine specific competencies and behaviours at interview, as appropriate. The approval process already considers such things as non-technical skills and behaviours and ‘culture’ is a core component of the ARROW framework".