Emma RadmorePRA has written to the chairs of dual regulated firms reinforcing the importance it places on diversity within boards for improving decision making and providing effective challenge. It reminds firms it expects them to have the diversity of experience and capacity to provide effective challenge across the full range of a firm’s business. A recent EBA study shows that 70% of the UK institutions it sampled has a policy in place for promoting diversity on the management body. PRA comments this is a significant improvement from the 15% in 2015 but shows some firms are still not compliant.
PRA notes that it extended its requirements to insurers in 2018, with the effect that now all CRR firms, Solvency II firms and large non-Directive firms are required to have a policy to promote diversity while significant credit institutions and investment firms that are required to have a nominations committee must also set a target for the under-represented gender in the management body. Firms must also explain on their websites how they comply with regulatory requirements.
The letter calls on Chairs to take the opportunity to satisfy themselves the firm is meeting PRA’s requirements and take appropriate action. It also calls on firms to consider the extent to which the diversity policy is embedded in recruitment and succession planning for the board.