The Financial Conduct Authority released their Asset Management Market Study back in June 2017 which stated that there would be a requirement for UK Fund Boards to appoint a minimum of two independent non-executive directors (iNEDs), preferably more, the number of iNEDs will need to make up 25% of the board as a minimum. The other stipulations are that once appointed a successful iNED must serve for a period of no longer than 5 years and will need to come from a diverse range of background to increase diversity within boards.
Did we mention that these vacancies all need to be filled from September 2019 onwards? This doesn’t leave much time.
The FCA estimated that 480 iNEDs would be necessary to fulfil the required independent board roles. This raises issues on both sides. For firm how do you recruit an effective iNED when there is going to be so much competition and for individuals looking to get a role as an iNED, how can they demonstrate that they will be an effective member of the board?
Some of you may be wondering in what way is a UK Fund Board different to the Corporate Board structure of a UK Public or Private plc?
A UK Public or Private plc has at least two directors (although more usually six to ten) and is governed by the UK Corporate Governance Code. The board, including full-time and non-executive directors, sets the agenda in terms of new initiatives, remuneration and guarding the interests of shareholders.
A UK-authorised fund board, however, has an Authorised Corporate Director (ACD) who oversees the running of the OEIC – short-hand for Unit Trust and Open-Ended Investment Company – and leads a board of directors. Regulated by the FCA, the principal difference between Fund Boards and Corporate Boards is that Fund Boards need to demonstrate a risk-based framework that places the interests of its investors at its core. In particular, as promoters of products and users of outsourced distribution services, they need to be particularly vigilant about any evidence of miss-selling.
What are we doing to support the industry?
Here at FSTP we have been approached by the team at MosaicNED. They are currently working with the industry to help place suitable candidates with UK Fund Boards and helping to reassure the firms that the iNEDs they are placing are the best fit for the business.
Find out what our Senior Partner Julia Kirkland has to say about the Partnership between MosaicNED and FSTP in this short video.
FSTP were asked to bring our experience of financial services and expert training to design and deliver a training programme to prepare suitable candidates for undertaking iNED positions within boards. This should provide the individuals with all the knowledge that they need to get started in a role, obviously they will need to continue their learning throughout the duration they hold the position, and allows the firms to know that the iNEDs they are giving positions to are aware of the expectation and have the knowledge and understanding to be a valuable member of the board.
If you want to find out more about how MosaicNED can help you as an individual looking for a position or as a firm looking for helping in finding the correct calibre of candidate to join your board please do visit their website and get in touch.