Summarise the following into 1) TLDR, 2) section-wise table.  CONTENT: NEWCASTLE BUILDING SOCIETY
OUR EXPECTATIONS OF DIRECTORS
“A successful building society is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the society, generating value for members and contributing to wider society.” [Principle 1 of the UK Corporate Governance Code 2018 in the context of a building society]
What is the role of the Board?
 As set out in the diagram above, the role of a unitary Board can be summarised as:
-	Strategic leadership
-	Performance oversight
-	Building and manage the Board.
The following expectations from the PRA may provide helpful guidance:
“The PRA expects Boards and management to run the business prudently, consistent with the firm’s own safety and soundness and the continuing stability of the financial system. The desired outcome from a regulatory standpoint is an effective Board, which is one that
- establishes a sustainable business model and a clear strategy consistent with that model
- articulates and oversees a clear and measurable statement of risk appetite against which major business options are actively addressed
- meets its regulatory obligations, is open with the regulators and sets a culture that supports prudent management. 
To be effective a Board needs to include individuals with a mix of skills and experience that are up to date and cover the major business areas in order to make informed decisions and provide effective oversight of the risks. This also requires robust and well-targeted management information.
The specific accountabilities of individual directors under the Senior Managers Regime are additional to the collective responsibility shared by directors as members of the Board.
The setting of the corporate strategy is core to the responsibilities of the Board and it is important that the strategy is owned by the Board as a whole. The roles of the Chair and the CEO include giving all the directors, particularly the NEDs, the time and opportunity to contribute to the development of the strategy, and to provide appropriate challenge, before final sign off by the Board.
On culture – the Board should articulate and maintain a culture of risk awareness and ethical behaviour for the Society to follow. The PRA expects the culture to be embedded with the use of appropriate incentives (including remuneration) to encourage and require the behaviours the Board wants to see, and for this to be actively overseen by the Board. The NEDs have a key role to play in holding management to account for embedding and maintaining this culture.
On risk – the strategy should be supported by a well-articulated and measurable statement of risk appetite, which is clearly owned by the Board and actively used by the Board to monitor and control actual and prospective risks and to inform key business decisions. The risk control framework should flow from the Board’s risk appetite statement.”
What are the roles of executive and non-executive directors?
In the UK, the standard practice is to have a “unitary board”, comprising a combination of executive and non-executive directors. Under English law, there is no distinction between executive and non-executive directors. All are directors of the Society, so, for example, the NEDs should not decide amongst themselves before a formal Board meeting their collective position on the business coming to the meeting. 
Whilst at law there is no distinction between executive and non-executive directors, in certain situations the courts may expect a higher standard of care and skill from, say, the CFO on financial matters, compared with a NED. The UK Corporate Governance Code also allocates specific roles to the NEDs (see below).
Again, the PRA’s expectations provide useful guidance:
“Executive directors have specific management responsibilities for which they are accountable to the Board. It is their responsibility to manage the Society’s business on behalf of the Board and exercise judgement in the running of the business on a day-to-day basis. They should exercise that judgement within the strategy, risk appetite and other assessment and control frameworks set and overseen by the Board. NEDs’ responsibilities require them to both support and oversee executive management. As Board members, they all share in the wider Board duty to promote the success of the Society and to ensure that the Society continues to meet the Threshold Conditions.
In discharging their responsibilities, Boards should act in a cooperative and collegiate manner whereby NEDs support and encourage executive management and vice versa. However, this should not inhibit the NEDs from challenging executive management and holding them to account effectively. The PRA expects the chair to play a pivotal role in facilitating this culture.
Executive management manage the Society’s business on behalf of the Board. Boards therefore delegate a wide range of duties and responsibilities to the CEO or to executive management. The PRA expects Boards to be precise over what they delegate to the executive management and the limitations and accountabilities associated with each of the matters that are delegated. In doing so the PRA expects Boards to articulate clearly and unambiguously the matters reserved to the Board and the manner in which executive management must report and escalate matters to them, including the exercise of judgement in escalating matters of particular significance even if within delegated matters. [See below for details of matters reserved to the Board and matters delegated to executive management]
Between them the NEDs need to have sufficient current and relevant knowledge and experience, including sector experience, to understand the key activities and risks involved in the business and to provide effective challenge across the major business lines of the Society. The PRA expects to see evidence of effective challenge, particularly in relation to key strategic decisions. It is the role of the Chair to ensure that all views are heard and that the executives are not able to control the Board discussion. However, Board responsibility is collective and an effective Board is not simply a collection of specialists. So just as the Board should not delegate responsibility for major decisions to particular directors, the NEDs should not simply delegate responsibility for challenging the executives on particular issues to individuals among them who are considered specialists in the area.
The Board should have diversity of experience and capacity to provide effective challenge across the full range of the Society’s business and the opportunity to explore key business issues rigorously. Sometimes that may require the Board to understand and reach decisions on complex technical, legal, regulatory or other issues. It is the responsibility of the executive to explain such issues in clear and transparent terms that enable the Board to exercise their collective judgement and, where necessary, NEDs should be able to call on appropriate professional advice, although the directors will always remain ultimately and collectively accountable for all the Board’s decisions.
Board meetings should provide adequate time for each of the matters to be covered. Board meetings should be genuine, open discussions and not stage-managed, and the Chair has a particular responsibility to ensure that this is the case. NEDs should have unrestricted access to the Society’s employees and information as needed to enable them to carry out their duties.
The role of a Board committee is to support the Board. The committees are accountable to the Board, but should not relieve the Board of any of its responsibilities.”
Particular provisions of the Corporate Governance Code
“All directors must act with integrity, lead by example and promote the desired culture.
The Board should ensure that the necessary resources are in place for the Society to meet its objectives and measure performance against them.
In order for the Society to meet its responsibilities to members and stakeholders, the Board should ensure effective engagement with, and encourage participation from, these parties.
The Board should ensure that workforce policies and practices are consistent with the Society’s values and support its long-term sustainable success. The workforce should be able to raise any matters of concern.
The Chair leads the Board and is responsible for its overall effectiveness in directing the Society. The Chair should promote a culture of openness and debate. The Chair should facilitate constructive Board relations and the effective contribution of all NEDs and should ensure that directors receive accurate, timely and clear information.
NEDs should have sufficient time to meet their Board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account.
The Board and its committees should have a combination of skills, experience and knowledge.
Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to purpose and values, and be clearly linked to the successful delivery of the long-term strategy. Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of Society and individual performance, and wider circumstances.”

Which matters are specifically reserved for the Board?
Strategy and Management
•	Determining the overall strategy of the Group including approval of the Strategic Plan, with the responsibility for its implementation being delegated to the executive team
•	Monitoring operational and financial performance in pursuit of the strategy
•	Overseeing and approving the Society’s recovery plans, playbook and resolution pack on an annual basis
•	Approving budgets, forecasts and major capital expenditure or major disposal
•	Approving any extension of the Society’s activities into new business or geographical areas
•	Approving any decision to cease all, or a material part, of the Society’s business
Culture
•	Overseeing and setting the tone for the culture, values and behaviours of the Group
Structure, Capital and Liquidity
•	Approval of the Society’s ILAAP
•	Approval of the Society’s ICAAP
•	Approval of changes to the Group’s corporate structure
•	Approval of any programme for the issuance or buy back of long-term debt or capital
•	Approval of any utilisation of Bank of England emergency liquidity support
Financial Reporting and Internal Controls
•	Approval of Stock Exchange announcements, half year and final annual results
•	Approval of the Annual Report and Accounts
•	Approval of the Pillar 3 disclosures
•	Ratification of the Going Concern and Business Viability review following review and approval by the Audit Committee
•	Approval of any significant changes in accounting policies or practice, based on the recommendations of the Audit Committee
•	Ensuring an adequate internal control environment is in existence. The Board delegates oversight of internal controls to the Audit Committee
Risk Management
•	Ensuring an adequate risk management framework is in place. This includes approval of risk appetite, oversight of risk governance, reviewing the top risks, ensuring the strategy and risk appetite are consistent, and approving the ICAAP. The Board delegates oversight of risk management to the Group Risk Committee, as well as oversight of compliance with regulations
Senior Manager and Certification Regime
To ensure that the Society meets its obligations under the SMR, including
•	Reviewing at least annually the SMR Policy
•	Maintaining a responsibilities map for all prescribed responsibilities and ensuring all prescribed responsibilities have been allocated
Board Membership and Senior Management Issues
•	Approval of changes to the structure, size and composition of the Board, following recommendations from the Nominations Committee
•	Ensuring that adequate succession planning for the Board and senior management is in place following recommendations from the Nominations Committee
•	Approving and overseeing the appointments to the boards of subsidiary companies

Appointment and/or re-appointment or removal of external auditor
•	To be put to members for approval, following a recommendation from the Audit Committee
Remuneration
•	Agreeing the remuneration policy for the Directors and other Senior Executives, following recommendations from the Remuneration Committee
Delegation of Authority
•	Approval of the responsibilities of the Chair, the CEO and the Senior Independent Director
•	Approval of the delegation of authorities to the CEO
•	Ratifying the terms of reference for Board Committees and Subsidiary Companies
•	Receiving minutes and/or reports from the chairs of the Board Committees and Subsidiaries
Corporate Governance Matters
•	To ensure that a formal evaluation of the effectiveness of the Board is undertaken on an annual basis and to keep an external assessment, using outside consultants, under consideration and to facilitate one at an opportune time
•	Determining the independence of Directors
•	Review of the Group’s overall corporate governance arrangements
•	Agreeing the Directors’ Conflicts of Interest Policy and other relevant policies
•	Approval of the Notice of any General Meeting including all resolutions to be put forward to members
•	Insurance: Approval of overall levels of insurance for the Group, including D&O liability insurance
The Society’s Defined Benefit Pension Scheme
•	Consent to the Trustees to amend the Trust Deed and Rules
•	Approval of the appointment/removal of Society nominated Trustees.

Which matters are specifically delegated by the Board?
To Committees of the Board
The Corporate Governance Code requires the Society to have a Nominations Committee, an Audit Committee and a Remuneration Committee. The FCA requires the Society to have a Risk Committee. The Terms of Reference for each of these Committees is on the Society’s website. 
The Financial Reporting Council’s Guidance on Board Effectiveness July 2018 gives the following guidance in relation to Board Committees:
“When the Board makes use of Committees, it retains responsibility for, and endorses, final decisions in all these areas. Sufficient time should be allowed at the Board for Committees to report on the nature and content of discussion, on recommendations, and on actions to be taken. 
The Chair should ensure that Committee membership is periodically refreshed and that individual independent NEDs are not over-burdened when deciding the chairs and membership of Committees.
The minutes of Committee meetings should be circulated to all Board members and the Society Secretary, unless, exceptionally, it would be inappropriate to do so. The remit of each Committee, and the processes of interaction between Committees and between each Committee and the Board, should be reviewed regularly, for example, during the Board evaluation.”

To Executive Management
See the attachment to this paper. [This paper is in the course of being updated, is due to go the ExecCo at the end of February and then for Board approval – latest version to be annexed to this paper when adopted by the Board]

Examples of good Director behaviours and good NED questions
Good Behaviours
Have the highest standards of integrity and probity
Support and encourage the executives while monitoring and holding them to account, but not unquestioning support. Be empathetic
Question intelligently, debate constructively, challenge rigorously and decide dispassionately
Listen sensitively to the views of others
Gain the trust and respect of other directors
Open, honest and transparent debate
Disagreement amongst NEDs in a meeting can be a good way of ensuring a proper debate takes place, but recognising that all contributions are made for the best of the Society
Have an inquiring mind and be independent
Challenge by NEDs requires not just clear thinking to decide that a particular challenge is necessary, but perseverance and resilience to see the challenge through to a satisfactory conclusion
Challenge by asking open questions: What/How/Why/When/Who?
Challenge executive management if (a) information is not provided sufficiently in advance of meetings to enable thorough consideration of the issues or (b) information is insufficient, inaccurate or unclear
Seek more or better information if you think you need it
Don’t leave challenge to a specialist NED
Question assumptions and established views
Trust and mutual respect
Tackle difficult issues
If you don’t understand a complex technical, legal or regulatory issue, it is the responsibility of the executive to explain, so don’t be afraid to ask
Provide counsel and mentorship where helpful
Be prudent – focus on the safety and soundness of the Society
On Strategy – constructively challenge and help develop proposals
Ensure the strategy is clear and is owned by the Board
Keep up to date on the external environment in which the Group operates
Have a genuine interest in and commitment to the success of the Group
Be – Co-operative, collegiate, “Purpose-led”, brave, strategic, dynamic and ambitious for the Group
Add value by bringing new ideas, relevant industry insight and challenging, with a view to improving plans brought forward by the executives
Take a constructive approach to finding solutions rather than seeking scapegoats
Check whether the necessary resources are in place for the Group to meet its objectives
Engage with members, colleagues and other stakeholders
Focus on
-	the long-term sustainability of the Society, not the short-term
-	generating value for members – current and future savers and borrowers
-	contributing to wider society – “connecting our communities with a better financial future”
An effective Board should not necessarily be a comfortable place



Examples of good NED questions
“The result of not asking enough questions is poor decision-making. So, it is imperative that we ask more, and better, questions. Because asking questions requires a certain amount of vulnerability, the corporate culture must promote asking questions. Leaders should encourage people to ask more questions, based on the goals the leader is trying to achieve, instead of rushing to deliver answers. In order to make the right decisions, people need to start asking the questions that really matter”: Harvard Business Review.

Four Types of Questions
There are four types of questions: Clarifying, Adjoining, Funnelling and Elevating – each aimed at achieving a different goal – 
Clarifying Questions – to help better understand –
“Why do you say…….?”
Can you tell me more about…………….?”
People often don’t ask these questions because they make assumptions and (sometimes incorrectly) complete any missing information themselves.
Adjoining Questions – to explore related aspects of a problem 
“What are the related uses of this?”
“How would this apply across other areas of the business?”
Funnelling Questions – to dive deeper: asking to understand a previous answer, to challenge assumptions or to understand the root cause of a problem
“How did we do this analysis?”
“Why did we not include this step?”
Elevating Questions – to raise broader issues and to highlight the bigger picture. Being too immersed in an immediate issue makes it harder to see the overall context behind it.
“Taking a step back, what are the larger issues here?”
“Are we addressing the right issue?”
“Instead of talking about these issues separately, what are the larger trends we should be concerned about?”
Don’t Make Assumptions
Just because a paper is in the Board/Subsidiary/Committee meeting pack doesn’t mean we have to proceed in the proposed way nor that management universally support proceeding in that way. For example, Compliance or Risk or Internal Audit Services may have identified a Red Flag issue and may be suggesting a (very expensive) way of moving away from the Red Flag – don’t assume that we must proceed in the way suggested. To avoid making assumptions, be willing to ask
“Why are we doing this?”
“Does this really add value? How?”
“Are the necessary resources in place for the Society to meet this objective/to undertake this plan successfully?”
“Can we afford to do this? Is this the best use of the scarce resources we have”
“What assumptions have been made in producing this proposal?” “Are they the right ones?”
“Is there another way to achieve this?”
“If we did this in a different way, with a longer timescale, so we can progress other key priorities, what issues would that cause” “What other options are there here?”
Example Open Questions
“What is the key thing you want to improve?”
“What is the key risk causing you most concern?”
“What is going well on this project? Which areas need attention?”
“What problem would you solve first, and how would you do this?”
“What are you proud of?”
“What sort of support do you need [from us] in order to do this?”
“In which parts of the overall plan, would you most welcome further ideas/suggestions?”
“What do you think your goals and targets should be for the next period?” “Why those?”
“What do you really think about…………”
“What do we as an organisation assume that probably limits what we do? If we were to assume something else, what would change?”
“If you were not holding back, what would you be doing?”
“What needs improvement that we haven’t noticed?”
“What are we not facing that is in front of us?”
“What do want to achieve during this discussion?”
“What do you want to achieve this year?”
“Which areas can we focus on that would add most value to you/management?”
“What am I not asking you that I should be?”
Finally
Try asking questions the other person will enjoy answering – it will be surprising what comes out of that……
“Start asking more “stupid” questions – there is a common reluctance to ask a “stupid” question when we don’t understand something. It is time more of us did. Fear of asking “stupid” questions can lead you to pretend you know more than you do, which also makes you vulnerable to bluff and bullshit. Most people don’t mind being asked something “stupid”. If they do mind, it may be because they don’t understand it themselves, or have something to hide. In that sense, you learn something useful either way.” – Sarah O’Connor: Financial Times
