The FSA plans to extend the scope of the Significant Influence Function (SIF) regime and introduce a more detailed framework on effective governance standards within firms.
Nine significant influence controlled functions, made up of six new governing functions and three new systems and controls functions, are included in the proposals.
The paper 'Effective corporate governance (Significant influence controlled functions and the Walker review)' targets the execution of senior roles within firms, and builds on Sir David Walker's review of risk management standards published in November last year.
Graeme Ashley-Fenn, FSA's director of permissions, decisions and reporting, says: "Our experience shows once a firm gets its corporate governance right, with a strong and effective board, everything else flows from that."
Also in today's paper, the FSA proposes overturning an exclusion it made in July to its approved person rules, regards individuals likely to exert significant influence from within a UK-regulated firm which is a Limited Liability Partnership (LLP) or a non-body corporate.
Under the new proposals, firms whose parent or holding company was FSA-authorised would also no longer be excluded.
The FSA also wants to extend CF29, the significant management function, to UK branches of incoming European Economic Area (EEA) firms which accept retail deposits, to bring retail firms into line with the requirements for investment business.
It states: "All retail banking conduct of business in the UK is subject to our regulation, including business by those authorised in other EU jurisdictions. We are not seeking to approve individuals whose function relates solely to activities that fall within the home state authority's jurisdiction."
This last point is likely in response to the 2008 Icelandic banking crisis which saw Glitnir, Kaupthing, and Landsbanki collapse in October 2008, forcing the British government to pay out £7.4bn to 460,000 savers who lost money.
Consultation on these proposals will close on 28 April 2010. The final rules are expected during the third quarter of 2010.
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