Jacqui Hatfield, Partner and Head of the Financial Services Advisory group at law firm Reed Smith, comments on the announcement that the FSA is to extend its scrutiny of bank executives to those at overseas holding companies with “significant influence” over UK banks and brokers, as part of its efforts to tighten governance in the industry.
“The requirement for someone in a parent company of an FSA authorised firm who has a significant influence over the FSA authorised firm was a recommendation in the Walker Review. Under the FSA's plans, any person whose decisions/actions are regulatory taken into account by a regulated firm, including directors of overseas holding companies whose decisions/actions are regulatory taken info account by UK regulated entities will need to be approved. It means that the FSA will have a means to control and discipline them, alongside other approved persons eg. Directors and partners of FSA regulated entities for breaches of the Approved Persons Principles and Code of Practice.
“They would be most at risk of breaching the following Statement of Principles, which could lead to a reprimand, fine, suspension of approved persons status and/or a Prohibition Order preventing them from working in the UK financial services industry.
“I think it is right to include all people who exercise a significant influence over the firm to be approved. I am not surprised that the FSA is not planning on interviewing those in parent companies (in particular overseas ones) though, as there would be the issue of travelling cost involved in attending an interview and there would be arguments as to who should pay.”
FSA Vetting of Directors and Non-exec Directors
“I welcome guidelines as to what the FSA is looking for in relation to vetting directors and non-executive directors. It should be a transparent process.
“The issue with vetting directors and non-directors is controversial in that a number of individuals who have been recommended to withdraw their application are not having the opportunity to appeal. They would rather withdraw their application rather than for it to be made public that they had had their application turned down. There is also an issue with what happens when a vetted director/non-exec breaches the Principles and Code of Conduct and is disciplined – which could cause the FSA to appear foolish.”
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Notes to editors
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