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 aims to deliver fast technology, fair service and honest values within the banking industry. Starling’s purpose is underpinned by five Starling values: listen, keep it simple, do the right thing, own it and aim for greatness. Starling’s values are integrated into all functions of the Group, and reiterated through the Code of Conduct applicable to all employees and agency staff.
The Board ensures that the Group operates with a clear sense of purpose and collective vision. Board decisions and the Group’s overall strategy fully align with Starling’s core values. Group strategy is debated and agreed annually and considered at each stage of Board decision-making. Details of Group strategy are set out in the Strategic Report.
Board decisions are taken with due regard to all stakeholder interests. Starling is committed to providing a workplace culture that reflects its values of fairness, equity, inclusion, compassion and non-discrimination and adopts a best practice approach with regard to employee engagement.
The Board holds an annual strategy day which provides an opportunity for Board members to engage with Starling’s Executive to shape strategy. Board decisions are taken with due regard to employee interests and the Board receives quarterly updates on the results of employee surveys reviewing workplace culture from an employee’s perspective. To minimise potential conflicts, Directors are required to inform the Chair of any updates or changes to their external roles, including an indication of the expected time commitment for any new external role to assess whether the Director will continue to have sufficient time to adequately discharge their duties as a Director.
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 have an actual or potential conflict of interest and the requirement to inform the Chair, the CEO 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 Companies Act and the Group’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. Board members are screened for conflicts of interest and relationships with companies that do not meet Starling’s values and ethics. 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.
The Board also attends Starling’s offices regularly and interacts with employees. Virtual employee Q&A sessions are held weekly with a range of internal speakers including the CEO and occasionally the Chair and other Board members. Employees are encouraged to submit questions for these sessions (including anonymously), responses to which are shared across the organisation. Starling values the trust, confidence and views of all of its investors. Significant shareholders are represented on the Board and / or are entitled to nominate an observer to attend and speak at Board meetings.
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 reportings can take place. Starling has partnered with a charity helpline and developed an anonymised solution for employees to electronically raise any whistleblowing concerns. The Chair of the Board Audit Committee is the Whistleblowing Champion for the Bank.
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 Chair leads the Board and is responsible for its overall effectiveness, promoting open debate and facilitating constructive discussion. The Chair should ensure that all Directors have appropriate information and sufficient time is made available for meaningful discussion.
The Board comprises Executive and Non-Executive Directors, the majority of whom are independent Non-Executive Directors. A clear division of responsibilities exists between the roles of the Chair of the Board and the Chief Executive Officer. It is the responsibility of the Chair to lead and manage the work of the Board. Responsibility for the Group’s Executive leadership and day-to-day management of the Group’s business is delegated to the CEO. The Chief Executive Officer is supported in her role by the Executive. The Senior Independent Director acts as an experienced sounding board for the Chair and a trusted intermediary for other Board members.
Starling is committed to ensuring that its Board continues to comprise the appropriate skills, knowledge, experience and diversity required to fulfil its role and responsibilities.
The Board Nomination Committee is responsible for leading the process for identifying and nominating candidates for appointment to the Board. 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.
Internal and external evaluations of the effectiveness of the Board and Board Committee being undertaken at regular intervals. In 2022, the Board facilitated an external evaluation of the Board and Board Committees. The objectives of the review were to (i) evaluate overall effectiveness; (ii) provide clarity about the strengths and weaknesses of the Board; and (iii) to develop a clear set of priorities for improving the effectiveness of how the Board works in the context of Starling’s purpose and strategy.
The evaluation focused on three key elements: governance (roles / processes), business (strategy / culture) and behaviour (beliefs / values) within the context of Board decision-making, oversight and administration. Key recommendations were discussed with the Chair and the CEO, followed by a collective discussion with the Board centred on what was already working and suggested improvements. A set of priorities were agreed for implementation. To support effectiveness going forward, Starling continues to strive for simplicity and clear focus in Board agendas, papers and presentations, building on the progress made in previous years.
Based on their background, knowledge and skill set, new Directors receive a comprehensive and tailored induction following appointment to the Board. Through a combination of technical briefings and introductory meetings, the Board induction programme is designed to broaden Directors’ understanding of the Group’s business operations, strategic priorities, people, culture and customers. Directors are invited to provide feedback on the programme they receive to ensure it is useful and well targeted.
Training and Development
All Directors receive ongoing training and development 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. They 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.
The Board has ultimate responsibility for setting the strategy, risk appetite and control framework for the Group.
The Board delegates certain aspects of its responsibilities to its Audit, Risk, Remuneration, Nomination and Ethics and Sustainability Committees. Each Board Committee operates under clear Terms of Reference. The Board conducts an annual review of the terms of reference and membership of each of these committees, which consist primarily of independent Non-Executive Directors. Board Committee Chairs are responsible for updating the Board on outcomes and actions arising from Board Committee meetings.
|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 implementation and effectiveness of the Group’s Internal 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||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 the Starling’s culture, long-term business goals, risk appetite, corporate governance principles for banks, performances 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 in relation to current and potential future risk exposures of the Group arising from its ethics, environmental and societal responsibilities.|
Risk Operating Model
In order to support risk management activities, the Group operates within the principles of a Three Lines of Defence model. The respective roles of the three lines are described in the figure below. As the Group continues to expand, it is investing in developing the risk management capabilities across each of the Three Lines of Defence. In 1LoD, control teams have improved their assessment of the operational effectiveness of controls; in 2LoD, the Group has expanded its capacity and capability to enhance its risk and control assessment processes; and in 3LoD, the Group has further strengthened its Internal Audit function.
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.
The overarching direction of the Board is to take risk consciously and methodically in order to deliver the Starling ’s strategic and business objectives, while demonstrating management of material risks to levels that preserve financial and operational resilience, and which ensure the ongoing confidence of customers, regulators and investors.
Starling has adopted the Three Lines of Defence model for risk management. In the First Line of Defence (1LoD), individuals have been appointed to control roles to strengthen the processes for assessment and operational effectiveness of controls. In the Second Line of Defence (2LoD), the Group has expanded its capacity and capability to enhance its risk and control assessment processes. In the Third Line of Defence (3LoD), the Group has established an Internal Audit function which is responsible for providing assurance to the Board Audit Committee on the effectiveness of the controls, risk management and governance processes for the Group.
The Board Risk Committee and the Executive Risk Committee ensure that inherent and emerging risks are identified and managed appropriately.
In order to support risk management activities, the Group operates within the principles of a “Three Lines of Defence” model. The respective roles of the three lines are described in the figure below.
As the Group continues to expand, it is investing in developing the risk management capabilities across each of the Three Lines of Defence. In 1LoD, control teams have improved their assessment of the operational effectiveness of controls; in 2LoD, the Group has expanded its capacity and capability to enhance its risk and control assessment processes; and in 3LoD, the Group has further strengthened its Internal Audit function.
- 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.
- 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.
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 and statements are reviewed and approved by the Board Risk Committee and Board on an annual basis, to ensure that they remain consistent with the Bank’s regulatory requirements and overall business strategy.
In the pursuit of its strategic objectives, the Group actively accepts and manages certain risks and seeks to avoid or minimise other risks. Starling’s risk appetite defines the amount and type of risk that Starling is prepared to accept in pursuit of its strategic objectives and business plan. Starling also regularly reviews emerging risks which might sit outside of its direct control but which could have a material impact on its risk strategy and business model. This risk strategy is reviewed and approved by the Board Risk Committee on an annual basis to ensure that it remains consistent with the Board’s requirements and with Starling’s overarching business strategy.
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.
The Board Remuneration Committee is responsible for reviewing workforce remuneration and related principles and policies (including the alignment of incentives and rewards and any major changes in employee benefits structures) in line with the culture and broader values of the Bank. The Board Remuneration Committee comprises Non-Executive Directors only and is chaired by the Senior Independent Director.
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.
The Remuneration Policy applies to all employees and Directors of the Bank. 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. Where appropriate the Bank seeks external advice to support decision-making and inform the Board prior to approval of the Remuneration Policy.
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.
Starling’s key stakeholders are its people, customers, 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. Regular updates to the Board on people, ESG initiatives, brand sentiment and media activity assist the Board in understanding the impacts of the Company’s policies and practices.
Starling is committed to providing a workplace culture that reflects its values of fairness, equity, inclusion, compassion and non-discrimination and adopts a best practice approach with regard to employee engagement. Board decisions are taken with due regard to employee interests and the Board receives quarterly updates on the results of employee surveys reviewing workplace culture from an employee’s perspective.
At the core of the Bank’s value system is a belief in transparency, fairness and inclusion and this means actively listening to customers. The Board receives updates on consumer protection and customer safeguarding initiatives and is ultimately responsible for ensuring Starling has appropriate resources, processes and controls in place to protect customers from financial crime. The Board receives monthly reporting on customer complaint volumes as well as regular updates on implementation of the Consumer Duty regulations ahead of the FCA 31 July 2023 deadline. The Board has also appointed a Consumer Duty Regulations Board Champion.
Starling is committed to developing business relationships with high quality suppliers and partners who themselves are committed to operating under ethical and environmental standards equivalent to Starling’s own, including in the fair treatment of customers, employees and other stakeholders.
The Board recognises the importance of understanding how Starling’s business impacts the communities it serves and of contributing to the community through volunteering and charitable giving. Starling recently announced a new partnership with the National Trust 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.
Starling Bank Limited is authorised by the PRA and regulated by the FCA and the PRA. The Board and the Executive maintain strong, open and transparent relationships with regulators, allowing the Board to ensure Starling’s strategic aims and all decision making aligns with the requirements of these important stakeholders and those of its customers. On an annual basis, the Board invites representatives from the PRA to present first-hand their feedback and observations to the Board.
Starling values the trust, confidence and views of all of its investors. Significant shareholders are represented on the Board and / or are entitled to nominate an observer to attend and speak at Board meetings.
Further information on corporate governance at Starling, including our Section 172(1) Statement can be found in the 2023 Annual Report: