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Ed Balls: review of financial services internal audit code “vital part of improving City’s risk management”

28 September 2016

At Internal Audit 2016, the annual conference of the Chartered Institute of Internal Auditors, on Wednesday 28 September, former Shadow Chancellor of the Exchequer and keynote speaker Ed Balls commented on the importance of the recently-announced independent review of the code for effective internal audit in the Financial Services sector, published by the Chartered Institute of Internal Auditors.

Speaking at the Institute’s conference Ed Balls said: “Government, regulators and the financial services sector have equal parts to play in ensuring that the risks taken in the pre-credit crunch era are not repeated.”

“The mistakes in the handling of risk pre-2007 were primarily caused by a lack of understanding on the part of regulators, the government and senior executive and non-executive board members over what the real risks to the sector and within individual firms looked like. That kind of knowledge can only come from better regulation, cultural change, effective internal audit and closer co-operation between all stakeholders in financial services.”

“The process of the financial services sector working together with government and regulators to improve their joint approach to risk is something that has already been going on for several years, but remains a work in progress.”

“Reviewing the code for effective internal audit in the Financial Services sector is a vital part of that work. By involving a broad range of key stakeholders in the sector in examining the City’s risk management, we can ensure that internal audit is playing as central a role as it can in improving governance.”

Dr. Ian Peters MBE, Chief Executive of the Institute, comments: “The code has already made a positive impact on the position of internal audit in financial services. But it is time to take stock, and consider what more needs to be done to improve standards across the sector. We are delighted to have a senior group of industry figures to take on that challenge; and to have the support of the Bank of England, the FCA, the PRA and the FRC in taking the code forward.”

The review committee is chaired by Mike Ashley, chair of the audit committee of Barclays, and includes senior executives and non-executives from banking, insurance and asset management. The Bank of England/Prudential Regulation Authority, the Financial Conduct Authority and the Financial Reporting Council will all participate in the work of the committee.

The independent committee members are:

  • Tom Deane, audit director, TescoBank
  • Pam Kaur, group managing director and group head of audit, HSBC holdings
  • Brendan Nelson, chair of the audit committee, RBS 
  • James Turner, director of group finance, Prudential
  • Julia Wilson, chair of the audit committee, Legal and General and group finance director, 3i

The committee is today (28 September 2016) launching a wide-ranging consultation exercise to gather views and evidence on the impact of the Code; the state of internal audit across the sector; and what more needs to be done to improve standards of performance.

Further details about the review of the code can be found here.

The Institute’s current Financial Services code can be accessed here.