{ "docId": "019dd923-5e88-73ef-bd58-07b375a7cd5b", "docSlug": "335ba522863769dc", "documentTitle": "Banking and capital markets trends 2020: Laying the foundations for growth", "authorId": "PwC", "authorName": "PwC", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "landscape", "aspectRatio": 1.414, "pageNumber": 18, "pageCount": 88, "prevPage": 17, "nextPage": 19, "slideType": "section_divider", "function": "establish_context", "density": "overcrowded", "nDataPoints": 0, "notes": "Part of a series on Internal Audit Planning; this slide sets the stage for a deep dive into governance.", "elementsJson": [ "paragraph", "photo" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-5e88-73ef-bd58-07b375a7cd5b/18", "deckHref": "/decks/019dd923-5e88-73ef-bd58-07b375a7cd5b", "deckJsonHref": "/decks/019dd923-5e88-73ef-bd58-07b375a7cd5b.json", "deckAnchorHref": "/decks/019dd923-5e88-73ef-bd58-07b375a7cd5b#slide-18", "components": [ { "bbox": null, "kind": "callout", "text": "Firms approaching SM&CR as a compliance-led 'tick-box' exercise may fail to address the key underlying issues of concern to the FCA and miss opportunities to address governance problems.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-3be5-7612-8a2c-1329d9657e59", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 1, "w": 0.33, "x": 0, "y": 0 }, "kind": "image", "text": null, "attrs": null, "subkind": "photo", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1185a584-35f6-4265-970a-9f9151cf4a37", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.6, "x": 0.35, "y": 0.65 }, "kind": "paragraph", "text": "The new UK Corporate Governance Code (CGC), which came into force on 1 January 2019, sets the standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders. Although only applicable to companies with a premium listing of equity shares in the UK, the PRA has indicated it considers the CGC as best practice for all firms it supervises. The FCA has indicated it will continue to review firms' governance arrangements, particularly in areas such as remuneration practices, dividend distributions and corporate governance at Board level.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "76c2a453-91e8-4581-89e3-974967996e90", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.35, "y": 0.95 }, "kind": "paragraph", "text": "We present in this section particular topics internal audit functions may wish to include in their annual plan; however, governance and conduct is a theme that should be incorporated and considered across all reviews. The implementation of the SM&CR regime over the next couple of years further highlights individual accountability for firms' ways of working.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "866f2ecf-c6c5-4a14-8103-4584a170b501", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.6, "x": 0.35, "y": 0.8 }, "kind": "paragraph", "text": "Regulators and other key stakeholders are holding organisations to higher standards of governance and proactive risk management. Boards, CEOs and senior management must be able to demonstrate that they are able to assess their risks, design robust internal controls to mitigate them, and have robust governance frameworks that drive effective decision making. We have seen the FCA apply significant scrutiny to asset managers with unsuitable governance arrangements, e.g. by subjecting them to Board Effectiveness Reviews. Areas of challenge include the quality of Board MI, level of independent challenge, group dynamic, board skillset and operating model keeping pace with growth.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b4f9b584-605a-4b70-ab0a-9af0caeaf7c8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.6, "x": 0.35, "y": 0.35 }, "kind": "paragraph", "text": "Regulators are increasingly interpreting operational failures and/or risk management issues (be it related to operational resilience, financial crime, customer treatment or financial resilience) as potentially due to ineffective Board and senior management governance.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bdc65d4f-6995-4800-bc99-8c42efe6af74", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.6, "x": 0.35, "y": 0.2 }, "kind": "paragraph", "text": "We continue to see the regulators focused on governance, accountability, conduct and culture, with the topics specifically highlighted as priorities in both the FCA and PRA business plans, but also underpinning other regulatory focus areas.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d6fc4ef9-6814-4858-98de-8e4fa89ca69a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.6, "x": 0.35, "y": 0.45 }, "kind": "paragraph", "text": "The FCA sees good governance and culture as being critical to reducing potential harm to consumers and markets through enabling effective oversight of decision-making. A key aspect of the FCA's governance and culture agenda is the extension of the Senior Managers and Certification Regime (SM&CR) to all FCA authorised firms on 9 December 2019 alongside its focus on 'purpose' in creating healthy cultures and looking at firms' remuneration practices. Firms approaching SM&CR as a compliance-led 'tick-box' exercise may fail to address the key underlying issues of concern to the FCA and miss opportunities to address governance problems", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fb087653-9e35-4ea0-815a-8c806e11c2fc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.6, "x": 0.35, "y": 0.05 }, "kind": "title", "text": "Governance and accountability (1/8)", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2f7bed15-db53-4539-ae41-c498edf933d6", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 66, "from": 18, "beatId": "88b6734e-092d-4991-8706-5639248f97fb", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Evidence", "beatSlug": "evidence", "evidence": "The document provides evidence and analysis on various topics, including governance, risk management, and regulatory compliance.", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }