Prudential Regulation Authority Rulebook

2A.1

A firm must ensure that:

1. (1) the system of governance referred to at paragraph 2.2(1) establishes, implements and maintains effective cooperation, internal reporting and communication of information at all relevant levels of the firm;
2. (2) the system of governance referred to at paragraph 2.2(1) establishes, implements and maintains effective decision-making procedures and an organisational structure which clearly specifies reporting lines, allocates functions and responsibilities, and takes into account the nature, scale and complexity of the risks inherent in the firm's business;
3. (3) the members of the governing body collectively possess the necessary qualifications, competency, skills and professional experience in the relevant areas of the business in order to effectively manage and oversee the firm in a professional manner;
4. (4) each individual member of the governing body has the necessary qualifications, competency, skills and professional experience to perform the tasks assigned;
5. (5) it employs personnel with the skills, knowledge and expertise necessary to carry out the responsibilities allocated to them properly;
6. (6) all personnel of the firm are aware of the procedures for the proper carrying out of their responsibilities;
7. (7) the assignment of multiple tasks to individuals and organisational units does not or is not likely to prevent the persons concerned from carrying out any particular function in a sound, honest and objective manner;
8. (8) it establishes information systems which produce complete, reliable, clear, consistent, timely and relevant information concerning the business activities, the commitments assumed and the risks to which the firm is exposed;
9. (9) it maintains adequate and orderly records of the firm's business and internal organisation;
10. (10) it safeguards the security, integrity and confidentiality of information, taking into account the nature of the information in question;
11. (11) it introduces clear reporting lines that ensure the prompt transfer of information to all persons who need it in a way that enables them to recognise its importance as regards their respective responsibilities; and
12. (12) it adopts a written remuneration policy in accordance with Chapter 3A.

2A.2

A firm must ensure that its policies on risk-management, internal control, internal audit and, where relevant, outsourcing referred to in 2.4(1) clearly set out the relevant responsibilities, objectives, processes and reporting procedures to be applied, all of which must be consistent with the firm’s overall business strategy.

2A.3

A firm must establish, implement and maintain a business continuity policy aimed at ensuring, in the case of an interruption to its systems and procedures, the preservation of essential data and functions and the maintenance of insurance and reinsurance activities, or, where that is not possible, the timely recovery of such data and functions and the timely resumption of their insurance or reinsurance activities.

2A.4

A firm must ensure that at least two natural persons effectively run the firm.

2A.5

A firm must ensure that effective processes and procedures are in place to prevent conflicts of interest and that potential sources of conflicts of interest are identified and procedures are established in order to ensure that those involved in the implementation of the firm's strategies and policies understand where conflicts of interest could arise and how such conflicts are to be addressed.

2A.6

A firm must monitor, and on a regular basis evaluate, the adequacy and effectiveness of its system of governance and take appropriate measures to address any deficiencies.