6.1 Organisational framework

The management body of an institution should ensure a suitable and transparent organisational and operational structure for that institution and should have a written description of it. The structure should promote and demonstrate the effective and prudent management of an institution at individual, sub-consolidated and consolidated levels. The management body should ensure that the internal control functions are independent of the business lines they control, including that there is an adequate segregation of duties, and that they have the appropriate financial and human resources as well as powers to effectively perform their role. The reporting lines and the allocation of responsibilities, in particular among key function holders, within an institution should be clear, well-defined, coherent, enforceable and duly documented. The documentation should be updated as appropriate.

The structure of the institution should not impede the ability of the management body to oversee and manage effectively the risks the institution or the group faces or the ability of the competent authority to effectively supervise the institution.

The management body should assess whether and how material changes to the group ’ s structure (e.g. setting up of new subsidiaries, mergers and acquisitions, selling or winding-up parts of the group, or external developments) impact the soundness of the institution ’s organisational framework. Where weaknesses are identified, the management body should make any necessary adjustments swiftly.