Blog : BOARD TALK
|Posted on December 7, 2011 at 12:30 AM|
After HSBC was fined a record £10.5m and made to foot a compensation bill of nearly £29.3m for miss-selling financial products to thousands of elderly and disabled people in the UK, the Financial Services Authority (FSA) has acted quickly on guidance on non-executive directors (NEDs).
The reputational damage to Britain's largest bank can't be quanitfied. But any non-executive directors on the boards of other plcs handling such products should pay attention to what the FSA has to say today.
The FSA says it expects NEDs to play a pivotal part within the firm’s governance by ensuring that the firm is meeting its responsibilities to retail customers. It proposes that amongst the issues that NEDs should consider are the following :
Taking a strategic view to treatment of their customers; being confident that the firm is identifying, monitoring and mitigating risk to its customers; having the right mix of skills on the board and the right information to be able to constructively challenge the executive; andsupporting a culture within the firm that takes into account fair treatment of customer.s
Anyone remaining who thought the job was a sinecure should think again.
Clive Adamson, FSA director of supervision, conduct business unit said:
“Non-executive directors have a duty to challenge the management of their firms where they believe the firm could do more to ensure that customers get fair treatment. Our consultation sets out the clear expectations that we have for NEDs and we expect them to play their part by considering this carefully.”
Together with the guidance for NEDs, the FSA has also set out for firms an outline of how it will assess how firms are managing these risks.
You can download the guidance for NEDs (which followed a conference yesterday) here.