Maintaining high standards of stewardship
Although Hodge Bank is a privately-owned entity, it aims to implement the highest standards of corporate governance. The following is a summary of the Bank’s framework.
The Board has ultimate responsibility for the proper stewardship of the Bank in all its undertakings. It meets regularly throughout the year to discharge its responsibilities for all important aspects of the Bank’s affairs, including monitoring performance, considering major strategic issues, approving budgets and business plans and reporting to the shareholder.
A Board control manual has been adopted which describes the high-level policy and decision-making arrangements within the Bank. The manual includes a schedule of matters reserved to the Board together with those items delegated to directors and Board and executive committees.
The Board has established the following standing committees:
- Audit committee: Adrian Piper, Alun Bowen, Helen Molyneux, John Barbour and Jonathan Hodge. All members of the audit committee are non-executive. Executive members of the Board and other senior executives attend as required by the Chairman. The function of the audit committee is to review the work of the internal audit function, to consider the adequacy of internal control systems, to monitor the integrity of the financial statements and ensuring the independence and objectivity of the external auditor. The committee meets at least four times a year.
- Risk and conduct committee: Alun Bowen (Chairman), Adrian Piper, Helen Molyneux, John Barbour and Jonathan Hodge. All members of the risk and conduct committee are non-executive. Executive members of the Board and other senior executives attend as required by the Chairman. The function of the risk and conduct committee is to oversee the management of risk and the conduct of the business on behalf of the Board. It ensures that significant risks are identified, understood, assessed and managed and that good customer outcomes are achieved. The committee meets at least four times a year.
- Remuneration committee: Helen Molyneux (Chairperson), Adrian Piper, Jonathan Hodge and Alun Bowen. The function of the remuneration committee is to consider remuneration policy and specifically to determine the remuneration and other terms of service of executive directors and senior managers. The executive directors decide fees payable to non-executive directors. The committee meets as required.
- Nomination committee: Jonathan Hodge (Chairman), Adrian Piper, Helen Molyneux and Alun Bowen. The function of the nomination committee is to recommend the appointment of directors to the Board and Board committees and to ensure that the Bank has an appropriate succession plan for executive and senior management positions. The committee meets as required.
Executive management has primary responsibility for the implementation of the Bank’s strategy and the operation of the Bank’s internal financial control framework. It manages risk by means of relevant committees as described below.
The management board is responsible for the formulation and execution of the strategy, and day-to-day management, subject to specific limitations and constraints imposed by the Board, and meets regularly throughout the year.
Executive risk committee
The committee meets quarterly and monitors the Bank’s risk management and internal control framework. It has specific responsibility for monitoring operational and conduct risks and for ensuring that appropriate training, policies and procedures are in place.
Assets and liabilities committee
The committee implements the policies of the Board with respect to liquidity and interest rate risk management and provides recommendations to the Board on strategies for managing these risks. It also monitors and controls new business pricing and treasury counterparty risk. The committee meets weekly.
Retail credit committee
This committee is responsible for proposing a credit policy to the Board in respect of all equity release business. It also monitors the application of credit policy, and ensures that all responsible lending requirements are met.
Commercial credit committee
The Committee is responsible for proposing a credit policy to the Board with respect to commercial lending and monitoring its application. It is also responsible for reviewing, challenging and if appropriate, approving credit proposals for new commercial lending business within its authority as delegated by the Board.
The committee meets quarterly and monitors the adequacy and appropriateness of the Bank’s actuarial models and methods, and reviews proposed changes. It also monitors the Bank’s overall exposure to insurance risks in light of actuarial experience.