Chapter 5 - Senior Management Competence And Governance

Question 1

Board subcommittees

Name 5

Answer 1

Risk

Remuneration

Audit

Investment

Nomination

Question 2

UK governance code

LEARS

Answer 2

Leadership

Effectiveness

Accountability

Remuneration

Shareholder relations

Question 3

Responsibilities of directors

API SAD?

Answer 3

Act in accordance with company’s constitution

Promote success of company

Independent judgement

Skill care and diligence

Avoid conflict of interests

Declare personal interest in transactions

Question 4

Role of NED

Purpose?

Attributes - BEKS?

Answer 4

Custodians of governance

Critical friend

Assess board performance

Bring challenge and diversity of insight

Strategy
Performance
People
Risk

Behaviours
Expertise
Skills
Knowledge

Question 5

FCA core competencies for SIF

MR BFG?

Apply to NEDs

Answer 5

Market knowledge
Risk and controls
Regulatory

Business model and strategy
Financial analysis and controls
Governance and oversight controls

Question 6

FCA fit and proper requirements

Answer 6

Honesty
Integrity
Reputation
Competence and capability
Financial soundness

Question 7

Competency policy

Purpose?

FIT PM

Answer 7

Framework

Improve performance

Talent development

Performance Management

Question 8

Questions to test governance of competency?

Answer 8

Framework

Lines of reporting

Evidence and reporting

Record keeping

Review of policy and processes

Escalation

Plans to address issues

Communication

Reporting to regulator

Controls to ensure effective implementation

Question 9

How to measure competence

Answer 9

Performance appraisal

Competency based interview/review

External or independent assessment

360 feedback

Peer review

Knowledge based assessment

CPD

Question 10

Statement of Professional Standing

Who issues?
Four areas?

Answer 10

Accredited body like CII

Ethical code
Level 4 exam
Appropriate CPD
Approved Persons compliance

Question 11

Board responsibilities

CRASM?

Answer 11

Compliance and integrity

Regulate the executive

Approve plans Accounts and budgets

Selection of executive, reward and Succession planning

Mitigate risk and supervise risk management

Question 12

FRC guidance on board effectiveness

2009 review of Higgs report

Answer 12

Effective board should not necessarily be a comfortable place. Challenge essential

Direction for management
Display ethical behaviour consistent with values
Performance culture that adds value
Decision making based on clear line of sight into business
Embraces evaluation of effectiveness of governance

NEDs should have formal tailored induction