Featured Product

    PRA Letter Reinforces Need for Compliance with Rule on Board Diversity

    March 04, 2020

    PRA published a letter reinforcing the importance of Board diversity for improving decision-making and reminding firms to comply with the PRA rules in this area. The letter, which is written by the PRA Executive Directors for international bank, deposit-taker, and insurance supervision, is addressed to the Chairs of Solvency II insurers, large non-directive firms, and Capital Requirement Regulation (CRR) firms, is a reminder of the requirement to comply with PRA rules in this area. The letter states that diverse boards, made up of members with different skills, knowledge, experience, and values will support different perspectives being brought to discussion on business operations and risk strategy.

    As noted in Supervisory Statement SS5/16, titled "Corporate governance: Board responsibilities," PRA expects boards to have the diversity of experience and capacity to provide effective challenge across the full range of the business. The letter highlights that the publication of EBA report on the benchmarking of diversity practices in February 2020 showed that 70% of the sampled UK credit institutions and investment firms have a policy in place for promoting diversity on the management body. While this showed is a substantial progress since 2015, when only 15% of the sampled UK credit institutions and investment firms reported having such a policy, compliance is still not universal. Following the initial EBA benchmarking report, PRA extended these requirements to insurers in April 2018 and now all Capital Requirement Regulation (CRR) firms, Solvency II firms, and large non-Directive firms are required to engage a "broad set of qualities and competencies when recruiting to the management/governing body." Significant credit institutions and investment firms, which are required to have a nominations committee, must also set a target for the under-represented gender in the management body. Firms must also explain on their website how they comply with the respective requirements.

    According to the letter, Chairs of these firms should see that their firm is meeting the PRA requirements and take remedial action where required. In doing so, Chairs (and, where appropriate, Chairs of the Nomination Committee) should consider the extent to which the diversity policy is embedded in recruitment and succession planning for the board, to support constructive debate and challenge on the range of issues facing the firm. Chairs should expect to discuss this with their supervisors through the course of normal supervisory dialog.

     

    Related Link: Letter

    Keywords: Europe, UK, Banking, Insurance, Solvency II, CRR, ESG, Governance, Board Diversity, PRA, BoE

    Featured Experts
    Related Articles
    News

    CFPB Finalizes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) published a final rule that sets out data collection requirements on small business lending, under section 1071 of the Dodd-Frank Act.

    March 30, 2023 WebPage Regulatory News
    News

    BCBS to Consult on Pillar 3 Climate Risk Disclosures by End of 2023

    The Bank for International Settlements (BIS) published a summary of the recent Basel Committee (BCBS) meetings.

    March 23, 2023 WebPage Regulatory News
    News

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News
    News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    US Congress Report Examines Data Privacy and Cybersecurity Regulations

    The U.S. Congressional Research Service published a report on banking, data privacy, and cybersecurity regulation.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    EU to Conduct One-Off Scenario Analysis to Assess Transition Risk

    The European authorities recently made multiple announcements that impact the banking sector.

    March 10, 2023 WebPage Regulatory News
    News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8810