Regulatory Guidance for Non-Executive Directors

Objective

The objective of the service is to assist NEDs to obtain the necessary FSA approval for their role, to enable NEDs to fulfil their responsibilities with skill and confidence and to reduce the risk of confrontation with regulators throughout their term of office.

Regulatory challenge

The principal regulatory challenges for a NED are:

• Obtaining FSA approval for the appointment
• Interviews with FSA supervisors during ARROW and other visits to the firm
• Meeting FSA requirements and expectations in the course of their duties

As FSA becomes more intrusive, so it becomes ever more challenging and demanding, especially in relation to the performance of NEDs. The new NED approval interview regime is resulting in one in five potential NEDs not proceeding with the appointment. This high and expensive drop-out rate is one which firms and candidates are increasingly keen to forestall. Sound preparation saves expensive disappointment.

OWL Approach

The OWL approach is in four parts:

• Preparation for approval and ARROW interviews by mock interviews and guidance on areas of due diligence required and expected

• Quarterly briefings on regulatory developments, covering changes in regulatory requirements as well as evolution in regulatory practice

• Half yearly briefings on regulatory obligations for Board members of regulated firms

• On-call advice on regulatory questions of principle and practice

Through this approach, OWL provides NEDs and regulated firms with a combination of regular and on-demand advice and briefings. Focused on FSA and European regulation, a key aim of the service is to assist directors to keep up to date with their ever expanding and constantly changing regulatory obligations and to determine the best means of fulfilling them.