The workings of the Board and its committees
The Plc Board
The Plc Board (the "Board") currently comprises the Group Chairman (Non-Executive), the Deputy Chairman (Executive), one additional Non-Executive Director and four Executive Directors. At each Annual General Meeting ('AGM') of the Company, at least one third of the Directors retire from office by rotation. The Non- Executive Directors are considered to be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement. David Walker is the current Senior Non- Executive Director and group chairman. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information. They are also able to take independent professional advice as appropriate.
The Board meets once a month and has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and regulatory issues. At these meetings, the Board reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to shareholders. The following committees have been established to deal with specific aspects of the Group's affairs.
Operating Board
The Operating Board is chaired by the Chief Executive and comprises the Group Finance and Operations Director, Group Commercial Director and five members of the senior management team representing the operational businesses within the Group. It meets once a month to discuss operational matters, regulatory compliance, development opportunities and trading performance.
For larger acquisitions, a separate operating board is put in place and is attended by the Group Chief Executive, the Group Finance and Operations Director and the Group Commercial Director from the main board.
Audit and Compliance Committee
Chaired by the Group Non-Executive Chairman, the Audit and Compliance Committee comprises the Group Chairman and our second Non-Executive Director. A senior manager from our insurance business, the Group Compliance Director, the Group Finance & Operations Director and representatives from our external auditors participate in the meetings as non-voting observers. The Group Chief Executive attends by invitation. The Committee meets four times a year.
The Committee's primary activities include:
- Reviewing the annual (audited) accounts and interim (unaudited) accounts before they are presented to the Board for approval
- Examining the appropriateness and effectiveness of the Group's systems and controls, including internal risk management processes
- Assessing the arrangements made by management to ensure compliance with regulatory requirements and standards.
The Committee also advises the Board on the appointment, independence and objectivity of the external auditors and on their remuneration for both audit and non-audit work. It also discusses the nature, scope and results of the audit with the external auditors; the Chairman meets separately with our external auditors during the course of the year.
Remuneration Committee
Chaired by a Non-Executive Director, the Remuneration Committee comprises the Non-Executive Director and the Group Chairman. The Deputy Chairman and the Group Chief Executive participate in the meetings as non-voting observers. The committee meets at least twice a year.
The Remuneration Report, which includes details of the Remuneration Committee's role, Directors' remuneration, pension entitlements and Directors' interests, together with information on service contracts, is set out in the 2008 Annual Report.
Solvency Committee
The Solvency Committee is chaired by the Group Commercial Director and comprises one Non-Executive Director, the Group Compliance Director, the Group Financial Controller and at least one senior manager from each of the Group's Insurance, Wealth Management and Healthcare operations. This Committee meets four times a year. The Solvency Committee supports the Board's Corporate Governance responsibilities, specifically in respect of monitoring the financial security of insurers and the Group’s banking partners.
Treating Customers Fairly (TCF) Committee
Chaired by a Non-Executive Director, the TCF Committee comprises the Group Compliance Director and three senior managers representing the operating business of the Group. This Committee supports the Board's desire for our clients to be at the centre of everything we do and for everything we do to exceed our clients' expectations. Our TCF policies are designed to ensure that customers are treated fairly in all their dealings with us throughout the lifecycle of their policy and relationship with us.
Conflict of Interest Committee
The Conflict of Interest Committee is chaired by the Group Development Director and comprises a Non-Executive Director and a senior manager from each operating business. It meets at least twice a year. The Committee supports the Board's Corporate Governance responsibilities including risk management and compliance with applicable codes and FSA themes. This includes reviewing provider tender processes, entertainment and sponsorship provided by third parties and management of any underwriting profit share arrangements.
Data Security Committee
Chaired by the Group Compliance Director, the Data Security Committee comprises the Group Operations Director, the Group Finance and Operations Director and senior managers from IT, HR and Marketing. The purpose of the Committee is to provide a consultative forum that address matters of data security arising within the Jelf Group with Particular reference to the Data Protection Act 1998. The key functions of the committee are to co-ordinate the assessment of data security risk across the Group and to initiate, implement and monitor the data security control environment. The committee meets on a quarterly basis.
Internal controls
The Board has overall responsibility for the Group's system of internal control. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and aims to provide reasonable and not absolute assurance against material misstatement. In order to discharge that responsibility in a manner that ensures compliance with laws and regulations and promotes effective and efficient operations, the Directors have established an organisational structure with clear operating procedures, lines of responsibility and delegated authority. There is an established framework of internal controls, which is set out in procedures approved by Executive Management. These procedures are readily accessible to staff, who follow their guidance. The more important elements of this framework are as follows
Management structure
The Board has overall responsibility for the Group and each Executive Director has been given responsibility for specific aspects of the Group's affairs.
Corporate accounting and procedures
Responsibility levels are communicated throughout the Group as part of the corporate communication procedure. Accounting, delegation of authority, authorisation levels, segregation of duties and other control procedures, together with the general ethos of the Group are included in these communications. Oversight responsibility for accounting control procedures across the wider Group, including compliance with FSA client money rules, is held by the group finance function.
Quality and integrity of personnel
The integrity and competence of personnel is ensured through high recruitment standards and processes, a comprehensive induction programme and subsequent training. Quality personnel are seen as an essential part of the control environment and the ethical standards expected are communicated through senior members of staff. A formal process of assessment of fitness and propriety, using credit referencing and FSA guidelines, is undertaken on a regular basis. All staff are set performance objectives that link to the Group's strategy. These are reviewed in regular one-to-one meetings and twice yearly formal reviews.
Liquidity and covenant compliance
Liquidity levels and compliance with bank debt covenants are projected forward for three financial years and updates are monitored on a monthly basis by the Group Finance and Operations Director. They are reviewed and approved by the Board.
Budgetary process
Each year the Board approves the annual budget, which includes an assessment of key risk areas. Performance is monitored and relevant action taken throughout the year by monthly reporting to the Plc and Operating Boards of updated forecasts together with information on key risk areas.
Investment appraisal
Capital expenditure is regulated by the use of authorisation levels. For all expenditure beyond specified levels, Operating Board approval is required.
Internal monitoring
The Audit and Compliance Committee is responsible for reviewing the Group's internal controls.
The Directors have reviewed the effectiveness of the system of internal controls in operation. As a result of this review, the Directors believe existing processes to be fit for purpose.
Relations with shareholders
The Company seeks to maintain good communications with shareholders. The Executive Directors make presentations to institutional shareholders, covering the interim and annual results, and maintain regular dialogue throughout the year. They ensure that the Board is regularly updated on institutional views.
The Company dispatches the notice of each AGM with an explanatory circular describing items of special business, in line with notice periods as per the Companies Act 2006. All shareholders have the opportunity (formally or informally) to put questions at the Company's AGMs. At each AGM, the Chairman advises shareholders of the proxy voting details on each of the resolutions, which are dealt with by a show of hands.
Going concern
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.