Corporate Governance
Statement
This was prepared pursuant to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. For the year ended 31 March 2024, Starling has applied the Wates Corporate Governance Principles for Large Private Companies (Principles) as an appropriate framework for its corporate governance practices. Further details on how Starling applies the Principles is set out below.
Principle 1: Purpose and Leadership
An effective board develops and promotes the purpose of a company, and ensures that its values, strategy and culture align with that purpose.
Starling was founded to give people a fairer, smarter and more human alternative to the banks of the past. Starling's vision is a banking industry driven by fast technology, fair service and honest values. Starling stands out among the traditional banks and next-generation players for the excellence of its service and the strength of its business model. It does this by developing best-in-class proprietary technology, offering an exceptional customer experience and building a strong balance sheet.
Starling's vision and mission are underpinned by five cultural values embodied by the Board, management and employees: listen, keep It simple, do the right thing, own it and aim for greatness. These values are a key driver of Group strategy, and integrated across all practices of the Group.
The Board is the principal decision-making body for all significant matters affecting the Group and is accountable to shareholders for creating and delivering long-term sustainable value. Having regard to the interests of all stakeholders, the Directors drive informed, collaborative and accountable decision-making and provide constructive challenge, advice and support to the Executive.
The Board is responsible for promoting the highest standards of corporate governance and ensuring Starling has the necessary resources, processes, controls and culture in place to deliver on its values and strategic objectives, in order to promote long-term sustainable growth.
With input from the Executive, Group strategic objectives are debated annually by the Board, including alignment of planned goals with the Bank’s mission and values. Board decisions are taken with due regard to the firm’s purpose, values and stakeholder interests and the Board receives updates on the results of the employee engagement surveys regarding topics such as leadership, diversity and inclusion, culture, recognition and wellbeing. Board members are screened for conflicts of interest and relationships with companies that do not meet Starling’s values and ethics.
Each Board agenda sets out Section 172(1) of the Companies Act 2006 (CA 2006) obligations as a helpful reminder to the Directors of their statutory duties. Board and Board Committee papers include a cover sheet that highlights key stakeholder impacts or considerations and ensures the Directors can make informed decisions in accordance with their duties. Significant shareholders are represented on the Board and / or are entitled to nominate an observer to attend and raise questions at Board meetings and the annual Board Strategy Day. Further, the Bank’s Investor Directors are members of the Board Remuneration, Board Nomination, Board Audit and Board Risk Committees.
In addition, the Board’s annual learning and development plan is linked to the matters set out in Section 172(1) CA 2006 to ensure there is sufficient consideration and coverage of the Directors’ statutory duties.
The Board has procedures in place for the disclosure of conflicts of interest. The Directors are aware of their responsibility to avoid a situation whereby they may have an actual or potential conflict of interest and the requirement to inform the Chair, the Chief Executive Officer and the Company Secretary of any change in their situation. A procedure is in place for the Board to authorise conflict situations, should they arise, in accordance with the CA 2006 and the Bank’s articles of association.
In line with Starling’s Conflict of Interest Policy, Starling will only tolerate conflicts of interest where the risk can be monitored, measured and managed within the Group’s risk appetite, with particular focus on its conduct risk appetite and the need to ensure Starling’s customers are treated fairly. The Company Secretary is responsible for keeping appropriate records, including the scope of any authorisations granted by the Board. The Board undertakes an annual review of conflict authorisations.
Starling is committed to conducting its business with honesty and integrity in an open and transparent manner where all employees feel they are able to report their concerns. Starling’s Whistleblowing Policy details a robust process to enable concerns of wrongdoing to be escalated in a confidential manner so that necessary investigations, remediation actions and reporting can take place.
Starling has partnered with a charity helpline and developed an anonymised solution for employees to electronically raise any whistleblowing concerns. The Board Audit Committee Chair is the Bank’s nominated Whistleblowing Champion and responsible for ensuring and overseeing the integrity, independence and effectiveness of the Bank’s policies and procedures on whistleblowing.
Principle 2: Board Composition
Effective board composition requires an effective chair and a balance of skills, backgrounds, experience and knowledge, with individual directors having sufficient capacity to make a valuable contribution. The size of a board should be guided by the scale and complexity of the company.
The Board is led by an experienced Chair who is responsible for the Board’s overall effectiveness, promoting a culture of openness and debate and facilitating constructive Board relations.The Chair is responsible for leading the work of the Board, promoting a culture of openness and debate and establishing effective stakeholder engagement.
Responsibility for the Group’s executive leadership and day-to-day management of the Group's business is delegated to the Chief Executive Officer. The Group’s strategy and overall objectives are proposed and developed by the Chief Executive Officer and Chief Financial Officer for review and approval by the Board. The Chief Executive Officer is responsible for implementing the decisions of the Board and Board Committees. The Chief Executive Officer is supported in his role by the Executive Committee.
The Senior Independent Director acts as an experienced sounding board for the Chair and a trusted intermediary for shareholders and other Board members.
The Board comprises Executive and Non-Executive Directors. Aside from the Investor Directors and Anne Boden (Founder and former CEO of Starling Bank Limited), the Board has determined that all Non-Executive Directors (including the Chair) are independent in character and judgement, including in their thinking and challenge of management. The Board annually reviews the independence of its non-executive directors, taking into account the nature of their external appointments, the market value of Company shareholdings, any potential conflicts of interest and length of service.
Starling is committed to ensuring that its Board has the appropriate skills, knowledge and experience to fulfil its roles and responsibilities and this is kept under regular review by the Chair and Board Nomination Committee. The composition of the Board brings an effective balance of skills, knowledge, experience and diversity to deliver on Starling’s strategic objectives. All Directors have a detailed understanding of the market and regulatory frameworks in which Starling operates and, with varied professional backgrounds, Starling’s non-executive directors bring fresh and diverse perspectives to Board review and decision-making.
During the year, Board members attended an externally led development session aimed at addressing feedback from the Board’s prior year effectiveness evaluation and improving the quality of Board challenge. The Directors also completed a self-assessment survey which contained a list of skills and experience linked to Starling’s long-term strategy. As part of this process, Directors suggested training and development topics where they felt there were opportunities to further enhance the knowledge of the Board.
Director Induction
Starling’s Directors’ Induction Programme is key to ensuring new Board members receive the information they need to become as effective as possible in their role in the shortest practicable time. Each Director receives a tailored induction to Starling which is designed to be comprehensive yet adapted to the new Director's background, experience, existing knowledge and skill set.
The programme is reviewed annually by the Secretariat. After a Director has completed the programme, they are invited to provide feedback to ensure it is useful and well targeted. Through a combination of technical briefings and introductory meetings, the Directors' Induction Programme is designed to broaden a new Director's understanding of the Group’s business operations, strategic priorities, people, culture and customers.
Any changes to external roles held by a Director are required to be notified to the Chair in advance. This is to ensure the Director will continue to have sufficient time and capacity to adequately discharge their duties as a Director.
Training and Development
All Directors receive ongoing learning and development updates to enhance their roles as Board and Board Committee members. Starling’s Non-Executive Directors engage fully in this process. Throughout the year, the Directors are kept apprised of their legal and regulatory duties, and invited to request any areas that they would like specific training on.
Directors participate in strategic deep-dive discussions with the Executive and receive detailed briefings from external advisors on new and emerging regulatory, legislative and market developments.
Principle 3: Director Responsibilities
The board and individual directors should have a clear understanding of their accountability and responsibilities. The board’s policies and procedures should support effective decision-making and independent challenge.
Delegation
The Board is Starling’s governing body. It is responsible for ensuring the long-term sustainable success of the Group, setting Group strategy, agreeing corporate objectives, monitoring risk appetite, and playing a lead role in establishing the Group’s culture and values. The Board operates based on the principle of collective responsibility therefore all Board members are collectively and individually accountable for all actions and decisions of the Board.
The respective responsibilities of the Executive and Non-Executive Directors are well understood. Clear divisions of responsibilities exist between the Chair, the Chief Executive Officer and the Senior Independent Director and these are defined in Starling’s Corporate Governance Framework, which sets out the key responsibilities and procedures in place to ensure the Bank is governed to a high standard and supports oversight of a range of matters. The framework facilitates responsiveness and effective decision-making, ensuring that the Board, Board Committees, Executive Committee and senior management are able to collaborate proactively, consider issues as they arise and respond appropriately.
The Board discharges some of its responsibilities directly and others through the Board Audit, Risk, Remuneration, Nomination and Ethics and Sustainability Committees. Board Committee terms of reference provide a clear remit of responsibility for each committee and are annually reviewed for best practice enhancements. The membership of Board Committees principally comprises Non-Executive Directors to ensure independent challenge of senior management thinking. Board Committee chairs are responsible for reporting to the Board on the outcomes and decisions of each Board Committee meeting. The key areas of responsibility of each board committee are summarised below:
| Board Committee | Key Responsibilities |
|---|---|
| Board Audit Committee | Ensuring effective governance of the Group’s financial reporting, including monitoring the integrity, clarity and completeness of financial disclosures, reporting on significant financial reporting issues and judgements and reviewing and approving changes to Group accounting policies. Overseeing the effectiveness of the Group’s internal audit and external audit functions (including their programmes of work) and reviewing the adequacy and effectiveness of the Group’s operational controls in mitigating risk, through an independent assurance lens. |
| Board Risk Committee | Overseeing the Group’s current and potential future risk exposures (financial and non-financial), recommending appropriate risk appetite and tolerances to the Board and overseeing effective risk management across the organisation. Ensuring the Group’s risk policies, frameworks, capabilities and controls are recognised and embedded, and reflected in a robust and supportive risk culture. Ensuring the Group’s principal risks (including key and emerging risks) are properly identified, assessed and mitigated on an ongoing basis. |
| Board Remuneration Committee | Overseeing the Group’s remuneration system design and ensuring remuneration is appropriate and consistent with Starling’s culture, long-term business goals, risk appetite, corporate governance principles for banks, performance and control environment, as well as with applicable legal and regulatory requirements. |
| Board Nomination Committee | Reviewing the structure, size, composition, skills, knowledge, experience and diversity of the Board and ensuring formal, rigorous and transparent procedures exist for the appointment of new directors. In conjunction with the Board, giving full consideration to orderly succession planning for Directors (executive and non-executive) and other senior management roles below Board level. |
| Board Ethics & Sustainability Committee | Providing oversight and advice to the Board on ethics, environmental and societal matters including, in the context of the Group’s long-term strategy, impacts on people, the environment and the communities which the Group operates in. |
Starling’s governance structure comprises the Board, the Board Committees and principal Executive Committees. The structure supports the Board in effective decision-making, provides clear lines of accountability and responsibility, and enables independent challenge and problem-solving to promote the long term success of the Group.
Risk Operating Model
The Board Risk Committee is the primary committee to receive and review risk-related information. First line (1L) management and committees are responsible for ensuring that the risk and control environment is established and maintained in day-to-day decision making, and that individual decisions are made in line with the agreed risk appetite. The Risk function is responsible for assessing the adequacy and effectiveness of 1L risk governance and control activities. They ensure that risk limits are set at appropriate levels to keep aggregate risks within risk appetite and that the aggregate forward-looking risk profile relative to risk appetite is effectively monitored and reported to Board Committees.
Principle 4: Opportunity and Risk
A board should promote the long-term sustainable success of the company by identifying opportunities to create and preserve value and establishing oversight for the identification and mitigation of risks.
Risk management
The Board actively promotes the long-term sustainable success of the Group. Its overarching direction is to take risk consciously and methodically in order to deliver Starling’s strategic objectives, while demonstrating management of material risks to levels that preserve financial and operational resilience. This ensures the ongoing confidence of customers, regulators and investors.
In order to support and strengthen our risk management activities, Starling operates within the principles of the Three Lines model. The respective roles of the three lines are described below. Risks are managed within 1L via proactive identification, assessment, control, monitoring and reporting. Second line (2L) supports and constructively challenges 1L, and the Group has expanded its capacity and capability in 2L to enhance its risk oversight processes. In the third line, the Group Internal Audit function is responsible for providing assurance to the Board on the effectiveness of the controls, risk management and governance processes for the Group and ensuring alignment to regulatory expectations and industry standards. Starling’s Risk Management Maturity Programme will further transform and elevate the Bank’s enterprise-wide risk management and compliance capabilities.
The Business
- Manage risks within appetite via proactive identification, assessment, measurement, management, monitoring, control and reporting;
- Report on risks and issues;
- Design and implement controls to manage risks;
- Review the design and effectiveness of controls; and
- Establish effective risk culture.
The Risk Function
- Develop, implement and maintain the risk management framework and policies;
- Develop an appropriate risk appetite for Board approval;
- Provide independent expert advice and guidance;
- Ensure effective risk-based decision-making subject to governance and oversight;
- Support and challenge first line risk management; and
- Provide assurance on regulatory compliance and effectiveness of key controls.
Internal Audit
- Independent assurance;
- Assess whether risk management is being implemented and operating effectively across both first and second lines; and
- Review the overall risk management approach to ensure alignment to regulatory expectations and industry standards.
The Board is ultimately responsible for ensuring that the risk management approach and risk governance structure are applied in practice and operate as expected. The Board Risk Committee and Executive Risk Committee ensure that inherent and emerging risks are identified and managed appropriately.
Starling’s Risk Strategy is to create and maintain a robust risk culture and embed effective risk management practices in order to ensure that the Group delivers a reputable, responsible and sustainable business. The Group recognises that this needs to be achieved through providing an open and transparent environment where well-trained and informed individuals take intelligent risk, subject to clear policies, in pursuit of the Group’s business strategy.
Starling’s Risk Appetite Framework sets out its overall approach, including policies, processes, systems and controls through which risk appetite is established, communicated, managed, monitored and reported. Starling’s risk appetite considers the material risks to the business, with consideration given to the potential impact on elements such as the statement of financial position, statement of comprehensive income, customers, employees, reputation, regulators and other stakeholders. Starling’s Risks Appetite Framework and statements are reviewed and approved by the Executive Risk Committee, Board Risk Committee and Board on an annual basis, to ensure they remain consistent with the Bank’s regulatory requirements and overall business strategy.
The Board Audit Committee is responsible for challenging the Bank’s internal audit governance framework, strategy, charter, methodology and priorities for the year as well as monitoring progress against the 2023 / 2024 internal audit plan and approving the 2024 / 2025 internal audit plan.
Principle 5: Remuneration
A board should promote executive remuneration structures aligned to the long-term sustainable success of a company, taking into account pay and conditions elsewhere in the company.
Remuneration policy
Starling’s remuneration is designed to attract, retain and motivate employees of the highest quality, encouraging them to deliver exceptional business performance aligned to Group strategy. The Board Remuneration Committee is responsible for reviewing workforce remuneration and related principles and policies (including the alignment of incentives, rewards and any major changes in employee benefits structures) in line with the culture and broader values of the Bank.
Starling is committed to adhering to rules on remuneration, incentives and relevant financial regulatory regimes applicable to a bank. As a result, the Group has in place a risk-focused Remuneration Policy which is consistent with and promotes effective risk management and does not expose the Group to excessive risk. The Remuneration Policy also aligns to the Group’s culture, corporate governance principles, performance, control environment and legal and regulatory requirements.
Policy reviews
The Remuneration Policy applies to all employees and directors of the Group. It is reviewed annually to take account of any changes to policies, practices and procedures, and aims to strike a balance between short and long-term business performance.
Principle 6: Stakeholder Relationships and Engagement
Directors should foster effective stakeholder relationships aligned to the company’s purpose. The board is responsible for overseeing meaningful engagement with stakeholders, including the workforce, and having regard to their views when taking decisions.
The Board fosters effective stakeholder relationships aligned to Starling’s purpose and values. The Board is responsible for overseeing meaningful engagement with its stakeholders, and having regard to their views when making decisions. Starling’s key stakeholders are its people, customers and suppliers, communities and environment, shareholders and regulatory bodies. The Board recognises the importance of engaging with each of these groups to help inform its strategy and decision-making. Starling’s Corporate Governance Framework ensures that there is accountability, fairness and transparency in how the Bank is run and communicates with each stakeholder group. Regular updates to the Board on people, environmental, social and governance initiatives, brand sentiment and media activity assist the Board in understanding stakeholder impacts of the Group’s policies and practices.
The Board is committed to ongoing review and challenge on how it can improve on its engagement with customers, employees and other key stakeholders. From making thoughtful, sustainable choices for the planet to championing equality, ethics are a driving force for Starling and it actively engages with industry, consumer bodies and voluntary organisations across a range of issues.
People
Listening to, and empowering employees is critical to achieving Starling’s vision, and employees are actively encouraged to share their views and participate in regular employee engagement surveys as well as weekly ‘Ask Starling’ discussions. The output from these surveys and discussions is closely monitored to ensure responses from the senior management team are communicated effectively. Employees can also raise whistleblowing concerns through an externally facilitated advice line. The Board monitors these reports and follows up actions regularly through the Board Audit Committee, as needed.
Customers
Starling listens to its customers, so it can deliver what they need. Throughout the year, the Board received monthly reporting on customer complaint volumes as well as regular updates on the implementation and embedding of Consumer Duty which is focused on delivering good outcomes for customers.
Suppliers
Starling builds relationships with high quality suppliers and partners who are committed to operating under ethical standards and values equivalent to ours. The Board has an understanding of Starling’s reliance on critical service providers and ensures that it has appropriate and effective management systems and strategies in place to deal with outsourced service providers.
Communities and environment
Starling recognises the importance of understanding how our business impacts the communities and environments we serve. Starling’s partnership with the National Trust is aimed at improving access to nature and conserving natural habitats for all to enjoy now and in the future. Starling also encourages employees to volunteer within the community and offers two days’ paid leave per year to do so.
Shareholders
Starling maintains strong, open and ongoing dialogue with its shareholders. Significant shareholders are represented on the Board and / or entitled to nominate an observer to attend and raise questions at Board meetings.
Regulatory bodies
Starling strives for constructive dialogue and transparent relations with its regulators. Regulatory relationships are built on trust and confidence, supported by a strong understanding of the Bank’s business model, culture and core values.
Further information on how the Directors have had regard to the matters set out in Section 172(1)(a) to (f) of the CA 2006 and discharged their duty to promote the long-term success of Starling can be found in the FY24 Annual Report and Accounts.
Starling Bank Limited Annual Report & Consolidated Financial Statements 2024