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PRA - CP 7/15 - Senior Managers Regime - Approach to Senior Non-Executive Directors

Response to the consultation

ABCUL strongly supports the proposals set out in this consultation.  Our members were deeply concerned about the potential for this regime to hamper their ability to function effectively due to the burden of compliance as well as their ability to successfully attract and retain quality volunteers to staff their boards.  However, in tandem with PRA proposals to raise the threshold for their simplified regime to £250 million in assets, these proposals in relation to non-executive directors (which most credit union directors are) substantially address our concerns. 

We are also very supportive of the added provision to not require any pre-approval or notification in relation to NEDs for credit unions.  This is entirely appropriate given that credit unions are not subject to the same level of regulation which pertains for those impacted directly by EU regulation.

We are pleased that the PRA has decided to publish a supervisory statement in relation to the reverse burden of proof as well as clarifying the role of NEDs vs. other executives and board members.  Credit unions benefit greatly from the clarity that such guidance provides which is particularly important for smaller, resource-constrained firms.  

We would like to thank the PRA for taking on board the feedback it received in respect of its initial consultation and responding accordingly.  Credit unions were in no way responsible for causing the events which made the Senior Managers Regime necessary, nor do they presently represent a significant risk of consumer detriment or financial instability relative to other firms.  Therefore it is very welcome that a much-more proportionate regime is now proposed for the credit union sector.

Consultation questions

Q1. [PRA] Do you agree with the content of Part 1 of the PRA’s draft Supervisory Statement regarding the responsibilities and accountability of NEDs within the Senior Managers Regime?

We are broadly happy with the draft content of Part 1 of the Supervisory Statement.  We are grateful to the PRA for providing this guidance which is something that small firms such as our member credit unions greatly welcome for the clarity it provides.

Q3 & Q4

No response – this does not apply to credit unions.

Q8. [PRA] Do you agree with the proposed notification requirement for Standard NEDs in relevant authorised persons, including the draft form set out in Appendix 5?

We strongly agree that it would not be necessary to subject credit unions to this notification requirement given the fact that credit unions are not subject to the EU regulations which make it necessary.

Q9. [PRA] Do you agree with the clarification and expectations set out in Part 2 of the Supervisory Statement in Appendix 2 regarding the PRA’s proposed application of the presumption of responsibility?

Yes. We are broadly satisfied with the clarifications set out in the Supervisory Statement.  This guidance is very welcome in that it provides smaller firms, such as credit unions, with extra clarity as to the expectations placed upon them in order that they might take appropriate steps to ensure compliance.

We would be very happy to provide any further information or to answer any questions which the FCA may have in relation to our response.

You can find the full response available to download on the right hand side