Corporate Governance
CFS Board Committee Reporting Structure
Role of the Board
The individual Boards within The Co-operative Financial Services group act as the overall governing bodies for the Co-operative Financial Services as a whole and for respective subsidiaries. The individual Boards have a common composition. The Boards are responsible for the overall governance. This includes ensuring senior management establish and maintain adequate systems of risk management and that the level of capital held is consistent with the risk profile of the businesses.
Board balance and independence
The Board comprises of 16 non-executive Directors and 6 executive Directors, including 7 Independent Professional non-executive Directors as defined under the Combined Code. The division of responsibilities between the Chair of the Board (a non-executive Director) and the Chief executive is clearly defined.
Activities delegated to Committees
The Board delegates some key activities to its sub-committees in order to give specific focus and attention to a number of key governance activities.
Risk Management is a central theme of each of the Board sub-committees and this structure, and is designed to give the Board a joined up view of strategy, capital and risk.
Within this structure the Risk Management Committee (RMC), The Co-operative Financial Services Exposures Committee and the Chief Executive have specific responsibilities in relation to credit risk.
Key delegated credit risk activities to these committees are summarised as follows:
| Oversight | Mandate | Delegation | |
|---|---|---|---|
| Board | Oversight for risk management including credit risk | Delegates credit approval to Exposures Committee and the Chief Executive Delegates risk oversight to RMC | |
| ARCC | Independent assurance | Mandate from Board for provision of independent assurance | Supported by Internal Audit Function |
| CFS Exposures Committee | Review of large credit exposures | Mandate from Board for credit approval for large advances in excess of any individual mandates | Supported by analysis provided by the Risk and Capital Management |
| RMC | Oversight for all risk management activity including credit risk | Mandate from Board for risk policy and credit risk model approval | Supported by Risk and Capital Management |
| Chief Executive | Oversight for risk management including credit risk | Mandate from Board to approve individual credit exposures within predefined limits | Delegates part of mandate to the Director of Risk and Capital Management |
| Remco | Oversight of Remuneration & Appointments in respect of Executive Management | Mandate from Board to determine remuneration and employment policy | Supported by the Co-operative Group Remuneration and Appointments Committee |
| Chairs Committee | The Committee stands on an ad-hoc basis for the consideration of urgent business between the regular Board meetings | The Committee is authorised by CFS to deal with all matters between meetings of the Board, which would fall within the Board remit | Delegated by the Board to discuss urgent business and all decisions are recorded and responded back to the Board |
Board Committee Summary
Board: the Board is responsible for the success of the Company within a framework of controls, which enables risk to be assessed and managed. It is responsible for setting strategy, maintaining the policy and decision making framework in which this strategy is implemented, ensuring that the necessary financial and human resources are in place to meet strategic aims, monitoring performance against key financial and non-financial indicators, overseeing the system of risk management and for setting values and standards in governance matters. With the agreement of the Financial Services Authority (FSA), the Board has delegated certain responsibilities to the following Committees. Each of these Committees has a role in overseeing the Company and its subsidiaries.
CFS Audit & Regulatory Compliance Committee (ARCC): this committee provides independent oversight in relation to financial reporting; internal control and risk management; regulatory compliance; external audit and internal audit.
Download the Terms of Reference (PDF 46Kb)
CFS Exposures Committee: this committee ensures that non-executive directors are actively involved in major credit decisions (including sanctioning large counterparty transactions) and monitoring large exposures.
Download the Terms of Reference (PDF 0.1MB)
CFS Risk Management Committee (RMC): this committee is the most senior forum within the organisation that focuses in depth on risk management activity. It reviews and challenges risk management information and processes, approving risk policy and credit models and setting standards
Download the Terms of Reference (PDF 0.1MB)
CFS Executive Committee: this committee manages the business in line with the Board Risk Appetite Statement 1 (Risk Appetite) using a Board delegated risk mandate. It also maintains oversight of risk management processes and management information through regular input from the individual Sector Management Groups.
CFS Remuneration & Appointments Committee: The Committee's role in respect of the executive Management is to determine remuneration and employment policy, oversee contractual arrangements, review salaries, approve incentive schemes and any payments made under such schemes and recommend appointments to the Boards. In respect of Directors, the Committee makes recommendations to members in General Meetings for decision.
Find out more about the CFS Remuneration and Appointments Committee (PDF 9Kb)
Download the Terms of Reference (PDF 33Kb)
Chairs Committee: the Committee's role is to meet on an ad-hoc basis to deal with urgent business that falls between the regular Board meetings.
With Profits Committee: The Committee carries out the regulatory role as specified in FSA rules including providing independent opinion and oversight on matters that affect with-profits policyholders and provides its opinion to the Board on setting and changing the criteria for exercising discretion in relation to the With-Profits business.
Business Transformation Programme (bTp) Committee: The sub-committee’s purpose is to provide oversight by in depth reviewing of the Banking Transformation Programme in order to give some assurance to the CFS Board on the progress of the work in the programme.
1 The Risk Appetite statement is used by the board to define how much risk the business is willing to accept relative to the enhancement in potential return.
