The Value and Purpose of Board Evaluations from the Perspectives of the Board, the Regulator and the Practitioner
A Roundtable Discussion: Friday 26 October 2012
Andrew Bailey, Deputy Chief Executive of the Prudential Regulation Authority, joined Bvalco and invited representatives at this discussion which explored the relevance and challenges of evaluating the board within the current corporate governance environment. How does or should the approach of external facilitator compare and contrast with that of the regulator?
As we know, Boards of listed financial institutions are now required under the Code to evaluate their performance on an annual basis. They are encouraged to use external facilitators every three years as part of a new approach to financial regulation empowering regulators to look beyond compliance, to supervise proactively and to challenge.
The regulators of financial institutions are also now paying particularly close attention to the effectiveness of the board as a key component in the corporate governance structure.
While the regulator and the external facilitator have a shared interest which is the effectiveness of the board, there is an inherent difference in the perceived purpose of what they do and the experience of how they go about their reviews. This roundtable discussion is about improving mutual understanding and respect for what each does and how they do the job. Through discussion we hope to explore the primary differences and similarities and to improve understanding of the impact on board effectiveness.
We propose the following questions to provide some initial structure to our discussion:
1. To what extent should Chairs (and their Boards) expect a Regulator Review to be distinct from that of an external, independent Board Review?
2. What concerns have Chairs voiced about the similarities and differences of the two types of review?
3. To what extent might these two types of review require a different approach and lead to different outcomes?