Governance in UK financial services
Challenges for subsidiaries of international firms
The financial crisis, which began in 2007, exposed significant shortcomings in the governance of firms and the culture and ethics which underpin them. Since then, there has been a marked increase in direct intervention by the UK regulators into perceived governance failings. In particular, there is greater regulatory scrutiny of the role of overseas parent companies in the decision making process of UK regulated legal entities.
The challenge that global financial services firms face is to demonstrate that their UK regulated legal entities have robust and independent decision-making processes whilst operating as part of a group and managing any potential conflicts between entity and group interests.
This paper outlines the current expectations of regulators in this area; considers how the right choice of governance model and senior management can help a firm meet the expectations of UK regulators whilst facilitating the requirements of a global business; and details the practical steps currently being taken by firms to this end.