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    2021-03-26

SUP 10C.5A FCA governing functions: Oversight

Non-executive directors

SUP 10C.5A.1G
  1. (1)

    1As explained in SUP 10C.7.4G, the FCA does not expect a non-executive director ever to perform the other overall responsibility function.

  2. (2)

    Therefore, a non-executive director will not need to be approved to perform any FCA-designated senior management function unless they perform one of the FCA-designated senior management functions set out in this section.

No requirement to set up committees

SUP 10C.5A.2G
  1. (1)

    1This section says that being the chair of certain committees is an FCA-designated senior management function.

  2. (2)

    If a firm is not otherwise required to have one of the committees described in this section but chooses to set one up anyway:

    1. (a)

      being the chair of that committee is still an FCA-designated senior management function; and

    2. (b)

      this is the case even if the firm is not subject to any requirements of the regulatory system about the matters dealt with by the committee.

  3. (3)

    So for example being the chair of the firm’s nomination committee is an FCA-designated senior management function even if the firm:

    1. (a)

      is not required to have a nomination committee by SYSC 4.3A.8R or some other requirement of the regulatory system; and

    2. (b)

      is not subject to any requirements of the regulatory system dealing with nominations to the firm’s governing body or the other matters covered by SYSC 4.3A.9R.

  4. (4)

    However, nothing in SUP 10C requires a firm to set up one of the committees mentioned in this section if the firm is not required to have that committee by a rule elsewhere in the FCA Handbook or by some other requirement of the regulatory system.

  5. (5)

    So for example if a firm is not otherwise required to have a nomination committee nothing in this section requires it to set one up.

  6. (6)

    If a firm:

    1. (a)

      is not otherwise required to have one of the committees described in this section;

    2. (b)

      chooses to set it up anyway; and

    3. (c)

      gets approval for the chair of the committee to perform the applicable FCA-designated senior management function;

    then:

    1. (d)

      the firm is free to scrap that committee later; and

    2. (e)

      if it does so, the chair will cease to perform that FCA-designated senior management function.

Chair of the nomination committee function (SMF13)

SUP 10C.5A.3R

1If the firm has a nomination committee, the chair of the nomination committee function is the function of acting in the capacity of the chair of that committee.

SUP 10C.5A.4G

1See SYSC 4.3A (Management body and nomination committee) for material about nomination committees.

Chair of the with-profits committee function (SMF15)

SUP 10C.5A.5R

1If the firm has a with-profits committee, the chair of the with-profits committee function is the function of acting in the capacity of a non-executive chair of the committee.

SUP 10C.5A.6R

1If the firm has a with-profits advisory arrangement, the chair of the with-profits committee function is the function of being whichever of the following applies to the firm:

  1. (1)

    the independent person referred to in paragraph (a) of the definition of with-profits advisory arrangement; or

  2. (2)

    the non-executive directors referred to in paragraph (b) of that definition.

Chair of the governing body function (SMF9)

SUP 10C.5A.7R

2The chair of the governing body function is the function of having responsibility for chairing, and overseeing the performance of the role of, the governing body of the firm.

Chair of the risk committee function (SMF10)

SUP 10C.5A.8R

2The chair of the risk committee function is the function of having responsibility for chairing, and overseeing the performance of, any committee responsible for the oversight of the risk management systems, policies and procedures of the firm, including, where applicable to the firm, a committee established in accordance with the risk control requirements for SMCR firms.

Chair of the audit committee function (SMF11)

SUP 10C.5A.9R

2The chair of the audit committee function is the function of having responsibility for chairing, and overseeing the performance of, any committee responsible for the oversight of the internal audit system of the firm including, where applicable to the firm, a committee established in accordance with the internal audit requirements for SMCR firms.

Chair of the remuneration committee function (SMF12)

SUP 10C.5A.10R

2The chair of the remuneration committee function is the function of having responsibility for chairing, and overseeing the performance of, any committee responsible for the oversight of the design and the implementation of the remuneration policies of a firm, including, where applicable to the firm, a committee established in accordance with:

  1. (1)

    SYSC 19A.3.12R (Remuneration Principle 4: Governance);

  2. (2)

    SYSC 19B.1.9R (AIFM Remuneration Principle 3: Governance);

  3. (3)

    SYSC 19C.3.12 R (Remuneration Principle 4: Governance);

  4. (4)

    SYSC 19D.3.12R (Remuneration Principle 4: Governance); and

  5. (5)

    SYSC 19E.2.9R (UCITS Remuneration Principle 3: Governance).

Senior independent director function (SMF14)

SUP 10C.5A.11R

2The senior independent director function is the function of performing the role of a senior independent director, and having particular responsibility for leading the assessment of the performance of the person performing the chair of the governing body function.