Neil Mirchandani: Directors need to prove their competency
Following the recent departures of some of the most senior figures in British banking, debate is now beginning to focus on how their successors can be guided to ensure maximum stability in the financial sector. According to recent press reports, the Financial Services Authority (FSA) considers that a lack of adequate experience in UK boardrooms has contributed to the financial crisis. In response, the regulator is now said to be considering face to face interviews with future directors and non-executives of British banks.The UK regulatory regime has for many years recognised that a regulated firm's ability to maintain proper standards depends on the quality of its individuals, especially those in key positions. Under the Financial Services and Markets Act, the FSA already operates a regime for approving people who perform certain functions for authorised firms. The 'approved persons regime' applies to all directors and non-executive directors of banks and building societies, requiring an approved person to comply with a set of principles supported by a Code of Practice, backed up by disciplinary sanction.
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