Corporate Governance Report - GUOOFS
In preparing this report, the Board members of the Grand United Order of Oddfellows Friendly Society ( “the Society”) confirm that we consider the Annual report and financial statements taken as a whole to be fair, balanced and understandable, providing information that is necessary for members to assess the Society’s performance, business model and strategy.
The Board is accountable to the Society’s members and UK Regulators for the operation of the Society and regards good corporate governance as fundamental to this responsibility
The Society follows the AFM Corporate Governance Code issued in January 2019. This code, which focusses on culture within the organisation and stakeholder engagement, sets out Principles of Best Practice to be adopted on a comply and explain basis and provides guidance on how an organisation might achieve each of the principles in a manner appropriate to its size and complexity.
The Principles of AFM Corporate Governance are:
• Purpose and Leadership
• Board Composition
• Director Responsibilities
• Opportunity and Risk
• Stakeholder Relationships & Engagement
The detailed definition of the Principles and how they have been applied by the Oddfellows are set out in the table below.
How the Society has applied the Principle
Purpose and Leadership
An effective board promotes the purpose of an organisation, and ensures that its values, strategy and culture align with that purpose.
• To provide financial security for members through quality protection and investment products.
• To attend to members' claims for benefits and assistance in a prompt, sympathetic and efficient manner.
• To maintain the long-term stability and security of the Society.
• To embed a positive culture and the principles of Treating Customers Fairly into all aspects of the Society’s Business
The Society’s values are:
• Honesty and integrity
• Trust and respect
• Empathy and compassion and
• Expertise and professionalism
The Board aims to embed a positive culture and the principles of Treating Customers Fairly into all aspects of the Society’s Business.
The Society’s current strategy can be found in its Annual report and financial statements
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
The roles of the Chair and Chief Executive remained separate during2020 and are distinct in their purpose. The Chair is responsible for leadership of the Board and ensuring that the Board acts effectively. The Chief Executive has overall responsibility for managing the Society. Marian Blankson-Van Dyck who was considered independent on appointment, is the current Grand Master (Chair) of the Society. Neil Robinson is the Society’s Grand Secretary (Chief Executive).
Balance and Diversity
The Board is mindful of the need to ensure the right balance of skills, experience and background in its recruitment of directors. It is recognised that diversity in gender and ethnic backgrounds benefits the Society. However, competence relevant to the Society’s needs is also a consideration
Size and Structure
The Board normally consists of seven members, plus the Society’s Chief Executive and Deputy Chief Executive, who attend meetings on an ex-officio basis. However, currently there is one vacancy for Board Members. In addition, the Society has three Trustee Directors who also attend Board meetings on an ex-officio basis. All nonexecutive Board Members are subject to re-election every two years. The Board met 3 times during 2020 with some meetings taking place virtually via Zoom. All Board Members attended all meetings. The Board is satisfied that its range of expertise and experience is appropriate for the current needs of the Society.
In the opinion of the Board, seven Non-Executive Directors (excluding the Chair) are judged to be independent. Pam Palmer has been appointed the current Senior Independent Director and acts as the Member Relations Director
Non-executive director roles are voluntary and not contractual, so individual appraisals are not undertaken. There were no operational issues or concerns with any director during 2020.
All Board Members have access to both independent professional advice, as necessary, and the advice and services of the Secretary, who is responsible to the Board for ensuring its procedures are complied with.
The Secretary, who is also the Society’s Chief Executive, is responsible for ensuring good flows of information to the Board. This role and the role of the Deputy Chief Executive are the only remunerated posts who attend Board Meetings. The Board is satisfied that the Secretary performs his duties effectively. Both the appointment and removal of the Secretary is a matter for the Board as a whole
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 following decisions are reserved for the Board:
• Approval of Annual report and financial statements
• Approval of FSC Returns
• Investment policy
• Approval of outsourcing arrangements / contracts with third parties
Recommendation of changes to the Rules of the Society to be proposed at the Society’s AMC (AGM).
In view of the Society’s size the Board has agreed that it is currently not appropriate to have any sub-committees or appoint an Internal Auditor
Integrity of Information
The Society’s financial information is audited annually by its external auditors.
Opportunity and Risk
A board should promote the long-term sustainable success of the organisation by identifying opportunities to create and preserve value and establishing oversight for the identification and mitigation of risks.
The Strategic Report in the Society’s Report and Accounts sets out the options available to the Oddfellows.
As in all businesses, the Society faces a number of risks which if not monitored or managed may impact the Society’s financial position. The Society operates within a cautious risk range overall. The Board has identified a key number of risks to the Society. These include poor long-term investments, increased operational costs and expenses and an increase in claims.
The Board is responsible for the management of risk. This duty is fulfilled through a risk policy and key risks are monitored closely. These include Conduct Risk ("Treating Customers Fairly"). The Society prides itself on the high standard of service it provides to its members, but it reviews all its activities regularly to identify any areas where it may be falling short so that the necessary remedial action can be taken.
The Society continually reviews its exposure to financial crime and other cyber risks and takes appropriate measures including antifraud and anti-money laundering training to mitigate these risks. Society’s Money Laundering Reporting Officer is Neil Robinson.
A board should promote executive remuneration structures aligned to the long-term sustainable success of an organisation, taking into account pay and conditions elsewhere in the organisation.
No non-executive directors are paid for their time or support to the Society.
Appropriate expenses for meetings are reimbursed. The Chief Executive and Deputy Chief Executive receive remuneration packages appropriate to their experience and expertise according to salary scales originally adapted from the Whitley Council scales updated annually in line with RPI and reviewed by the Auditors.
Stakeholder Relationships and Engagement
Directors should foster effective stakeholder relationships aligned to the organisation’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 delegates from the Society’s membership are informed about developments taking place in the Society at the Society’s AMC (AGM) where they are also given the opportunity to debate, discuss and vote on proposals.
The Board is committed to maintaining good communications with members and providing them with sufficient relevant information to understand the Society and the performance of their products. Details of the of the Society’s Board and further information about the Society’s corporate governance arrangements are available on request