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Banks

Volume 708: debated on Thursday 5 March 2009

Question

Asked by

To ask Her Majesty's Government whether they vet the appointments of chairmen and chief executives of banks who (a) trade solely in the United Kingdom, (b) trade partly in the United Kingdom, and (c) are owned by a United Kingdom company and trade in the United Kingdom; if so, when the arrangement was put in place; and how the vetting is carried out. [HL1668]

Part V of the Financial Services and Markets Act (FSMA) provides the Financial Services Authority (FSA) with the power to regulate individuals exercising significant influence on the conduct of a firm's affairs in relation to regulated activities. The FSA requires both chief executives and chairmen of firms authorised by it to be approved. The FSA assesses applications for approved persons status against a “fit and proper” test which considers an individual's:

honesty, integrity and reputation;

competence and capability; and

financial soundness.

Since October 2008, the FSA has increased the scrutiny of candidates for significant influence functions (SIF). This scrutiny includes interviewing SIF candidates where appropriate and a greater focus on their personal accountability in post.