The UK Financial Services Authority is calling on the independent directors at financial firms to look out for the interests of retail clients.
The FSA Wednesday issued new guidance for non-executive directors that aims to assist these directors in understanding their role in ensuring customers are treated fairly within their firms. The regulator says that it expects independent directors to play a pivotal part within the governance of financial firms by ensuring that the firm is meeting its responsibilities to retail customers.
“Non-executive directors have a duty to challenge the management of their firms where they believe the firm could do more to ensure that customers get fair treatment,” said Clive Adamson, FSA director of supervision, conduct business unit. “Our consultation sets out the clear expectations that we have for NEDs and we expect them to play their part by considering this carefully.”
The guidance proposes that the sorts issues that independent directors should consider include: taking a strategic view to treatment of their customers; being confident that the firm is identifying, monitoring and mitigating risk to its customers; having the right mix of skills on the board, and the right information, to be able to constructively challenge the executive; and, supporting a culture within the firm that takes into account fair treatment of customers.
Along with the new guidance, the FSA has also set out for firms an outline of how it will assess how firms are managing these risks.