Operating sustainably
and responsibly is integral to our business model and strategy.
Corporate responsibility report

We take a SPECIALIST approach
to everything we do we challenge ourselves to ensure we understand
our stakeholders requirements and use our creativity, skill and expertise to fulfil them with honesty and integrity.

We take a PERSONAL approach to everything we do we treat everyone with respect and take accountability for our actions.

We take a FLEXIBLE approach to everything we do we ensure that we work collaboratively with our colleagues, customers and other stakeholders to achieve shared positive outcomes.

What we achieved in 2019
In October 2019, the Combination with CCFS became effective, and as a result we welcomed new customers and employees to the OSB Group. We also extended our reach in the communities in which we operate. As we integrate the two businesses, the focus of the combined Group remains the same: to become the financial services provider of choice for all of our customers and to
build on OneSavings Bank's long tradition of putting the customer at the heart
of everything we do.

The achievements in the year that
we are particularly proud of and which highlight how we are continuously improving our relationships with our key stakeholders include:

- Customers - consistently high consumer Net Promoter Score for both OSB: +66, and CCFS: +72
-  Employees -  OSB and CCFS were included in the Sunday Times 100 Best Companies to Work For and OSBIndia certified as a Great Place to Work
-  Communities - donated £398,000 to community and charitable causes across OSB and CCFS

Focused on our customers
OneSavings Bank encourages a culture that aims to:

- communicate and work with each customer on an individual basis
- act with consistency across all channels
- promote a confident, open and trustworthy workforce
- offer simplicity and ease of business
- offer long-term value for money, and
- offer transparent products without the use of short-term bonus rates, and to offer existing customers the benefit of loyalty rates.

Our customers are part of our success and we aim to become a financial services provider of choice. To support this, we use the OSB and CCFS established governance frameworks for consistent best practice across the business and ensure we have combined robust policies and procedures to minimise the risk of failure to deliver the service both our savers and our borrowers have come to expect.

The main policies which govern how we transact with customers are discussed below and apply at a Group level. As the integration with CCFS progresses, duplicate policies will be replaced by a combined Group-wide policy.

Lending policy - ensures that the Group lends money responsibly and within the Bank's lending criteria and risk appetite. The Lending policy is approved annually and rolled out to all relevant operational employees to use within their day-
to-day roles. The Lending policy goes through two quality assurance
processes with both the Operations and the Credit team, with results presented to the Group Risk Committee each
year. The performance of our lending and potential risks and changes are discussed, challenged and approved at Group Credit Committee and Group Risk Committee.

Vulnerable Customer and Suicide Awareness policy - sets out the standards and approach for the identification and treatment of vulnerable customers and provides guidance to all parts of the Group to ensure vulnerable customers consistently receive fair outcomes.

It ensures that employees are appropriately trained to identify vulnerability and potential suicide risks in our customers and put in place appropriate actions to deal with such issues as effectively as possible.
The Vulnerable Customer Review Committee continually improves standards and ensures that policy and outcomes are reported to the Group Risk Committee and ultimately the Board. The Group is committed to delivering fair and suitable outcomes to all customers based on their individual circumstances.

Arrears, Repossessions and Forbearance policy - ensures that handling of arrears and repossessions delivers
fair and suitable outcomes tailored
to the circumstances of the individual customer. The policy is focused on seeking to work proactively with customers to prevent them falling into arrears, or to cure the arrears position to deliver an appropriate outcome. The Group Risk Committee, a Committee of the Board, is responsible for reviewing risk issues and reporting regularly to the Board, which retains responsibility for understanding and controlling
the degree of risk undertaken.

Employees have mandatory annual training on all key policies, with a completion rate of 99% in 2019.

There are also policies that apply to the business as a whole and govern our operations, including:

- Data Protection and Retention policies to ensure the Group protects its customer data and manages and retains it fairly and appropriately.
-  Conduct Risk framework, including treating customers fairly to ensure the Group conducts its business fairly and without causing customer detriment.
- Conflicts of Interest policy to ensure the Group can identify and, if possible, avoid conflicts, and where this is not possible, to manage conflicts fairly.

Customer engagement

We take a personal approach to our customers, treating each customer as an individual and listening to their needs.
Many of our customers are also members of the Kent Reliance Provident Society (KRPS), the Society that took over the management of the membership of the former Kent Reliance Building Society. The Bank and the Society have benefited from member engagement through the online portal launched late in 2015, enabling input from a geographically broader range of members. During 2019, six major studies were undertaken, with the 514 members on our KRPS panel helping OSB to identify the areas of our propositions most valuable to members.

Customer complaints

Whilst we concentrate on providing an excellent service, when things go wrong, we aim to put them right and learn from any mistakes made.

Complaints Handling policy - ensures that the Group responds to complaints swiftly, fairly and consistently and
that customers' concerns are taken seriously. We investigate complaints competently, diligently and impartially, supported by appropriately trained employees. Through the Operations Committee, management information on complaints is collected and reported on a regular basis to the

Board and other relevant Committees as appropriate for them to consider if additional actions are required. Root cause analysis is used to identify and solve underlying issues rather than apply quick fixes.

Focused on our employees
Our employees are our key asset. Their skills, expertise and enthusiasm are fundamental to achieving our strategic goals, and throughout 2019
we have continued to invest in training, development and employee engagement activities in order to make OSB an even better place to work.

In the latter part of the year, a central focus was on the Combination with CCFS. We strived to ensure a joined-up
approach in terms of proactive employee communications in order to ensure that our employees in all sites were kept
up to date with how the Combination progressed, and that messages were consistent. Employees also had the opportunity to raise questions with the CEO anonymously and responses to those questions were published centrally for all employees to view.


OSB has dedicated Talent Acquisition Teams in place in both the UK and India. Recruitment specialists partner with hiring managers in all departments and provide bespoke support in attracting high quality candidates for vacant positions and, through robust selection processes, assist them to make strong selection decisions.

We advertise vacancies internally on a weekly basis in order to provide career development opportunities for existing employees. In 2019, we filled 22% of UK OSB vacancies (47 out of 217), 5% of vacant positions in India (11 of 210) and 56% of vacancies in CCFS (72 of 127) with internal candidates during the year.

A key focus for our Talent Acquisition Teams was again placed on proactively identifying potential candidates directly and through improved use of the OSB internet and external job boards. Our UK Talent Acquisition Team filled 20% of roles on a direct recruitment basis, resulting in a saving in excess of £ 280,000 on agency
recruitment fees. Within OSBI, almost 50% of vacancies closed in 2019 were by way of direct recruitment activities.

We take a personal approach to our customers, treating each customer as an individual and listening
to their needs.

We will expand our Talent Acquisition Team approach within CCFS in 2020, in order to ensure that hiring managers in Wolverhampton can utilise local, dedicated and specialist recruitment support.

Our recruitment procedures are fair and inclusive, with shortlisting, interviewing and selection always carried out without regard to gender reassignment, sexual orientation, marital or civil partnership status, colour, race, caste, nationality, ethnic or national origin, religion or belief, age, pregnancy or maternity leave or trade union membership.

No candidate with a disability is excluded unless it is clear that the candidate is unable to perform a duty that is intrinsic to the role, having taken into account reasonable adjustments. Reasonable adjustments to the recruitment process are made to ensure that no applicant
is disadvantaged because of their disability and questions asked during the process are not discriminatory
or unnecessarily intrusive.

In 2019, OSB welcomed 156 new UK employees with a further 142 joining OSBIndia. CCFS saw 128 new employees, which at the end of the year resulted in our Group-wide employee base expanding to a total of 1,834.

Both CCFS and OSB operate successful referral schemes with CCFS' Recommend a Friend Scheme resulting in the recruitment of 12 new employees in 2019. Within OSB, 22 vacant UK positions were filled during the year as a result
of the Employee Referral Scheme, with a further 32 vacancies filled as a result
of the Employee Referral Scheme in OSBI.

Training and development

The OSB People Development Team, based in both the UK and India, concentrates
on providing learning and development opportunities for all employees, using
a mix of internal and externally-sourced content, which are delivered through
a range of media, including workshop and digital formats.

A key focus throughout 2019 was the implementation of OSB's Fit to Practice Scheme, which requires line managers to play a more proactive role in
identifying development needs, providing developmental feedback and establishing appropriate activities to continually progress competence levels of their
direct reports.

Within CCFS, the approach regarding training and competence requirements is managed on a departmental basis and, as such, there is an opportunity for us to establish a consistent and Group-wide approach throughout 2020.

In 2019, we provided a wide range of workshops, including bespoke
management development programmes, regulatory training and business change content to support operational and systemic training needs. There were 354 separate workshops or learning events delivered by the People Development Team in the UK and over 100 other separate learning events attended by OSB staff that were either delivered at external events or delivered internally
by external training providers.

Within OSBI, we concentrate on making all those who join the Group feel as welcome as possible. We provide as much training as necessary to enable employees to perform to their best ability. In 2019, new employees were provided with an average of 108 hours of training before starting their role and in addition to this, there was significant focus placed on establishing consistency with workshops and content that is being delivered by the UK People Development Team. During 2019, we delivered 187 workshops at OSBI.

During 2019, the Learning and Development Team at CCFS increased the amount of training they deliver, with
the number of learning hours per full time employee increasing from 40 in 2018 to 45 in 2019. Over 200 sessions were run
by the CCFS team.

OSB saw 99% of monthly mandatory regulatory training completed within the monthly deadlines, which shows the importance we place on ensuring that our employees are suitably aware of key requirements. Mandatory training
is similarly taken seriously at CCFS, where 98.6% of all training was completed by the end of 2019.

The Group is also committed to supporting employees undertaking professional development and, in 2019, 19 OSB employees received financial support
to pursue professional qualifications, with a further six being financially supported by CCFS.

Under OSB's UK Apprenticeship Scheme, at the end of 2019, we had six apprentices working within a number of different functions throughout the business.
With each individual apprenticeship arrangement running for two years, we remain positive that this will lead to a number of permanent appointments and ongoing careers within the Group.

Retention and progression

The Group has a genuine desire to retain, support and develop its employee base. During 2019, 87 UK OSB employees, 43 employees in OSBI and 76 CCFS employees were formally promoted to a more senior grade.

Our Group-wide regretted attrition rate for 2019 was 11%, made up of an OSB UK rate of 10%, a rate of 7% in CCFS and 16% in OSBI, all below industry averages. In addition to this, we achieved a low rate of non-regretted attrition, which
on a Group-wide basis was 5%.

In 2019, OSB again identified Primary Talent Groups in both the UK and India, which were provided a range of talent management activities, in order to aid their ongoing progression. Activities included: access to a Board, Executive or senior mentor, career development interviews, psychometric profiling and related coaching and bespoke off-site
group leadership workshops delivered via an external Business School or specialist. The Group considers this initiative as an integral part of retaining and developing our emerging talent, either as technical specialists or as potential leaders of
the future.

Within CCFS, the approach to talent management in 2019 saw a continued focus on future leadership through
its Aspiring and New Line Manager programmes. The first is aimed at staff members who aspire to become a manager in the near future, and was designed to allow the employee to deepen their understanding of the
knowledge, skills and attitude required in a managerial or supervisory role. The second programme is for new line managers
and was developed to equip CCFS line managers and supervisors with the tools to develop and grow their leadership and management capabilities. It consists of ten core modules, which make up the essential elements of the programme, with an optional nine modules which can be completed thereafter.

Remuneration and benefits

We believe in rewarding our employees fairly and transparently, enabling them to share in the success of the business.
Details of the Group's remuneration policies can be found in the Remuneration Report on page 131.

We offer our employees a comprehensive range of benefits, and continue to review these to ensure they are in line with market practice.

Whilst there are some differences within the standard benefits packages provided by OSB and CCFS, we will be undertaking a detailed Group-wide review during 2020 in order to establish how these approaches can be harmonised.

In 2019, key additions to OSB benefits included the provision of a fully-funded Medical Cash Plan for all employees and the opportunity to sacrifice part of annual bonuses directly into the pension plan.

Enhancements made during 2019 to the CCFS benefits package included the introduction of flexible and voluntary benefits which included the following:
Health Cash Plan, Health Screening, Cycle to Work Scheme, Car Leasing Scheme, Holiday Trading Scheme and a Retail, Health and Wellbeing Discount Scheme.

We also encourage our employees
to hold shares in the Bank for the long term, via an annual ShareSave Scheme. These schemes are open to all UK-based employees and allow them to save a fixed amount of between £ 5 and   £ 500 per month over either three or five years in order to use these savings at the end of the qualifying period to buy OSB shares at a fixed option price. At the current time, around 58% of OSB employees and 68% of CCFS employees are members of one of our ShareSave Schemes.

Redundancy and redeployment

There is a Group-wide Redundancy and Redeployment policy designed to ensure that, ahead of any potential redundancy, we take all reasonable steps to identify feasible alternatives that meet the needs of the business. If a redundancy situation is unavoidable, employees would be given maximum warning possible, support to seek alternative positions, priority for retraining, counselling if required and support to seek alternative employment. The Board has safeguarded the existing contractual and statutory rights of OSB and CCFS employees and for a period following completion of the Combination, the Group amended redundancy policies to provide enhanced payments.

We believe in rewarding our employees fairly and transparently, enabling them to share in the success of the business.

Employee engagement and culture

In October 2019, for the fifth consecutive year, OSB's UK employees were invited
to participate in the Sunday Times Best Companies to Work For employee engagement survey, and almost 90% of employees submitted a response.

We achieved an overall score increase of 2.3% and, for the first time, OSB achieved a Two Star Accreditation Rating, signifying outstanding levels of workplace engagement. The continuous improvement in employee engagement saw OSB included within The Sunday Times 100 Best Companies to Work For list for the second time. The improved
results were primarily achieved as a result of the creation and implementation of Culture and Engagement Plans within
all departments and the broader identification and implementation of initiatives by the Engagement Steering Group.

Whilst CCFS did not participate in the Best Companies to Work For survey as a result of the Combination, it was placed in the Top 20 of the Sunday Times Best Companies to Work For list of 2019, the fourth consecutive year that CCFS achieved Top 20 status.

Our participation in the next Best Companies to Work For survey will be on a Group-wide basis, including all UK employees within both OSB and CCFS.

In June 2019, OSB employees in both the UK and India also took part in the annual Banking Standards Board survey for the third consecutive year, which aims to influence positive change throughout the banking sector. This saw another extremely high overall participation
rate of 76% and provided an insight into employees' perceptions of the application of the Group's values, potential barriers to challenge and to speak up along with their observations of unethical or inappropriate behaviour. The results showed an increase in the majority of the nine separate survey categories, with the average category score increasing by 1.4% compared with the 2018 results, giving OSB an average ranking of 14 out of the 29 banks who participated in the survey. When the
2020 Banking Standards Board Survey is undertaken, we will also be inviting all CCFS employees to participate for the first time.

OSBI participates in a separate employee engagement survey, run by the Great Place to Work Institute, and has been officially certified as a Great Place to Work for the third year in succession, with strong results in all five survey categories (credibility of management, respect for people, fairness at the workplace, pride and camaraderie between people). The highest score related to the Pride category, reflecting the strong brand and culture that exists throughout the teams in Bangalore.

In 2018, OSB partnered with specialist external consultants to design and launch the Group's Mission, Vision, Values and the supporting behaviours and in 2019 we focused on embedding these throughout the business, and weaving them into
our cultural DNA through an ongoing programme of related communications and pulse surveys.

OSB's four values (Stronger Together, Aim High, Take Ownership and Create Your Future) were implemented into Group- wide processes, including goal setting, appraisals, and interview and selection. To support this further, around 80 senior managers and the same number of line managers attended workshops focusing on truly embedding our values and progressing towards the achievement
of our Mission and Vision. In addition, we launched a separate and extensive programme of communications to introduce all staff to our different types of customers, who are at the heart of our Mission and Vision statements.

Our proactive approach in driving organisation culture and the associated efforts in the design of our Mission, Vision, Values and supporting behaviours saw OSB listed as finalists at the 2019 Business Culture Awards in two separate categories:
(a) Best Employer Brand and Values Initiative for Business Culture and (b) Best Medium-Sized Organisation for Business Culture. We were delighted that our work in the design and implementation of our Mission, Vision and Values was further recognised at the Business Culture Awards ceremony when we achieved the runner- up award in both categories.

CCFS has five established principles that act as organisational values (Respect, Excellence, Attention, Challenge and Honesty) which are already embedded within its performance appraisal processes. A key challenge for 2020
will relate to establishing a harmonised approach to Mission, Vision and Values that will enable us to further build on the cultural progression that has been achieved to date in both OSB and CCFS.

2019 also saw the inception of OSB's Workforce Advisory Forum (OneVoice), which aims to improve the level of engagement that OSB's Board has with the wider workforce. In addition to rotating Non-Executive Directors and Group Executive Committee members, the forum is attended by employees who have nominated themselves to represent the employees within their respective department or office location.

Within CCFS, the Employee Representative Committee, which met four times in 2019, includes representatives from all parts of the business who meet with senior management teams to raise any concerns they may have and provide input.

The Group operates a Whistleblowing policy, championed by the Chair of the Group Audit Committee. We encourage employees to feel confident in raising serious concerns at the earliest opportunity, and provide avenues to raise concerns confidentially, protected from possible reprisals. Regular reports are provided to the Group Audit Committee, including an annual report, which is also presented to the Board.

Employee recognition and awards

In 2019, OSB recognised the significant tenure of 51 employees who reached a five, ten, 15 or 20-year milestone of employment with the Group via our Long Service Award programme. There were two employees who reached 20 years' service and our longest-serving employee now has over 32 years' service. CCFS commenced trading in 2008 and in 2019 was able to provide 10 Year Service Awards to eight employees and 5 Year Service Awards to a further 53 individuals.

Every quarter, OSB employees are invited to nominate their colleagues as part of our OneTeam Award programme, which aligns with OSB's four values. Throughout 2019, we received over 400 nominations from which 29 individuals and teams were awarded. CCFS continues to recognise those employees who consistently demonstrate our values and behaviours and two employees each quarter are recognised as Charter Champions.
The expertise of our employees was also acknowledged within the mortgage industry during 2019 with Alison Drysdale winning Underwriter of the Year at the British Specialist Lending Awards.

Health and safety

The Board recognises the importance of health and safety and takes responsibility for it within the Group. We have a duty
of care to all of our employees and customers, and a safe and healthy work environment is paramount. We are committed to fostering and maintaining a working environment in which our
employees can flourish, and our customers can safely transact with us. We operate a Health and Safety policy and we review our employee and customer environment regularly.

Annual mandatory health and safety training is completed by all Group employees. In 2019, we undertook a full review of OSB's real estate. The review demonstrated that all sites are compliant with statutory health and safety regulations and provided us with additional best practice improvements and recommendations which will be implemented in the future.

Diversity and inclusion

We recognise the benefits that diversity of our people brings to the business and we actively promote and encourage a culture and environment which values and celebrates our differences. In 2019, we continued our journey to become a truly diverse and inclusive organisation, which is committed to providing equal opportunities through the recruitment, training and development of our employees.

The commitment to actively promote an environment where disabled candidates and employees are welcomed was again an area of focus. In line with OSB's Disability Confident Employer (Level Two)
status, we are proud to have a number of employees who are registered as disabled.

CCFS has already achieved Disability Confident Committed status and we'll be working towards increasing this to Level Two status in the future.

CCFS is a signatory of the MIND Pledge to Change and we are committed to reducing the stigma of mental health within the workplace. All CCFS managers undergo training aimed at preventing discrimination and promoting good mental health throughout our business.
This training programme is delivered with the support of Mental Health First Aid England and the programme is accredited by the Royal Society for Public Health.

Within OSB, there has been a significant focus on supporting mental health via the provision of Mindfulness Workshops which were delivered in a number of different office locations throughout the year.

CCFS' Wolverhampton offices are in the heart of the West Midlands and boast a richly diverse local community that is reflected in the diversity of our people. As a Group, we value and celebrate diversity by hosting theme days on
key festival dates such as Eid, Diwali, Vaisakhi and Easter.

OSB published its 2019 Gender Pay Gap Report in line with legislation that applies to all UK companies with more than 250 employees. The full publication is available on the Group's website: www.osb.co.uk.

OSB's median gender pay gap as at the snapshot date of 5 April 2019 was 37.6%, with the mean gap at 43.1%, these figures reduced from the 2018 reported figures
of 44.0% and 45.5%, respectively.

CCFS' median gender pay gap as at the snapshot date of 5 April 2019 was 17.8%, with the mean gap at 49.8%, these figures reduced from the 2018 reported figures
of 19.5% and 52.2% respectively.

Whilst it is pleasing to see progression across the Group, we are committed to reducing these gaps further.
Fundamentally, in both OSB and CCFS, the gaps relate to the structure of our workforce and reflect the fact that we have more men than women in senior roles and more female employees undertaking clerical roles. Progress has been made to positively impact both aspects of our workforce structure, and we remain confident that our gaps will continue to close.

We recognise that we need to focus on improving our gender balance and have made solid progress towards the commitments that OSB and CCFS have made as signatories of HM Treasury's Women in Finance Charter. Both OSB
and CCFS committed to a target of 30% of senior management positions being undertaken by female employees, with OSB's target date being the end of 2020 and CCFS by the end of 2022.

Solid progress was made towards these commitments throughout 2019, with OSB increasing from 28% at the end of 2018 and closing the year on 31%.

In 2020 we will be reporting our Women
in Finance Charter progress on a joint basis, maintaining an overall target of 30% by the end of 2020, at which point a new ongoing target will be established.

In 2019, OSB's Women's Networking Forum, which is focused on helping to identify and break down the barriers that prevent women from progressing within financial services, continued to
develop both its membership and range of activities. It provided regular opportunities for individuals to participate in relevant discussions, listen to and engage with guest speakers and undertake bespoke development activities to support and encourage career progression.

CCFS formed a Diversity and Inclusion Working Group in July 2019, comprised of 14 members, who introduced themselves to the business during National Inclusion Week. To date, they have coordinated
a mental health quiz, undertaken sign language sessions and engaged with a local charity to deliver a thought-provoking training session, challenging managers
to think how fair are they?.

CCFS is also engaged with Stonewall and became a diversity champion employer, ensuring that we do even more to ensure that our LGBT employees (and future hires) recognise CCFS as an inclusive employer of choice. Additionally, CCFS became a member of The Employers Network
for Equality & Inclusion (ENEI), the UK's leading employer network covering all aspects of equality and inclusion issues in the workplace.

At the end of 2019, over 56% of our UK OSB workforce was female, as was 59% of the CCFS employee base, and within OSBIndia females constitute 41% of all staff.
Currently, 15% of our Group Executive Committee and 45% of our Board are female, placing us 12th in the Financial Services Sector of the November 2019 Hampton-Alexander Review of the FTSE 250.

We have both Flexible Working and Homeworking policies in place to provide increased support to our staff who have parental and/or carer responsibilities.
Within CCFS, we have around 18% of employees working under a formal flexible working arrangement relating to reduced or compressed working hours. Within
OSB, around 10% of our UK employees work part-time hours with a further 11 individuals working a compressed working week.

  Male Female
Number of Board Directors  


Number of Directors of subsidiaries  


Number of senior managers (not Directors)  




All other employees1 763 929

1. Includes OSB, OSBI and CCFS

At the end of 2019, over 56% of our UK OSB workforce was female, as was 59% of the CCFS employee base, and within OSBIndia females constitute 41% of all staff.

Human rights

We want each member of our workforce and other stakeholders to be treated with dignity and respect. OSB endorses the UN Declaration of Human Rights and supports the UN Guiding Principles of Business
and Human Rights. The Group adheres to the International Labour Organisation Fundamental Conventions. We seek to engage with stakeholders with fairness, dignity and respect. The Group does not tolerate child labour or forced labour. OSB respects freedom of association and the rights of employees to be represented
by trade unions or works councils. The Group is a fair employer and does not discriminate on the basis of gender, religion, age, caste, disability or ethnicity. Our policy applies throughout the Group and is communicated to our employees during induction training.

The Group's third annual statement under the Modern Slavery Act 2015 was published on our website in June 2019. Over the year, no instances of modern slavery were reported and we continue
to ensure all relevant employment policies have direct consideration to the risk of modern slavery. These policies include Recruitment and Selection and Diversity and Inclusion.

CCFS has zero tolerance for slavery and human trafficking and, in line with the Modern Slavery Act 2015, takes active steps to identify and combat slavery and human trafficking in its business
and supply chains. In 2019, CCFS continued work to identify and assess potential risk areas in its supply chains, grading the risks as high or low based on criteria and factors we have determined to be relevant in the assessment of the risks. Enhanced due diligence is undertaken on suppliers considered to be high risk and anti-modern slavery provisions are incorporated into our contracts with suppliers.

OSB and CCFS have an Anti-Bribery policy, reviewed annually and approved by the Group Audit Committee. It will not accept or condone any behaviour connected with accepting, requesting or offering any bribe or inducement in return for providing
a favour.

OSB and CCFS do not consider themselves to be at a high risk of bribery; they conduct all of their business in the UK and the
only significant outsourcing arrangement is with a wholly-owned subsidiary of a UK Building Society in relation to CCFS' deposit-taking business.

In relation to the procurement of goods and services, the Anti-Bribery policy operates in conjunction with a number of other Group policies which are incorporated into the Conflicts of Interest policy, Modern Slavery Act Statement, and Vendor Management and Outsourcing policy.

All staff are required to complete an Anti-Bribery and Corruption Compliance Training module on induction and every other year afterwards. On an annual basis all staff have to acknowledge that
they have read the Employee Handbook, which reminds them of the need to comply with the Anti-Bribery policy.

If an employee suspects that the Policy is being violated, they are required to immediately report this in accordance with the Group's Internal Fraud policy and Response Plan or the Financial
Crime reporting procedure as appropriate.
The Group's Whistleblowing policy and procedure is also available as an alternative reporting process, if for
whatever reason, it is felt that the other procedures above are not appropriate.


OSBIndia is a wholly-owned subsidiary of the Group. OSBI operates from an office in Bangalore and employs 490 employees, of which 41% are female. OSBI supports the Bank across various functions including Support Services, Operations, IT, Finance and Human Resources. We actively promote integration between our colleagues in the UK and India with frequent employee exchanges, transfers, overseas training, staff and management visits.

As part of the Group, OSBI falls under the same Group policies that are in force in the UK offices, most importantly, Equal Opportunities, Non-discrimination and Harassment, Whistleblowing, Information Security and Clear Desk policies. There are only very slight differences in the Group's main HR policies due to local legislation.

OSBI is a holder of ISO 27001: 2013 certified, which demonstrates high standards of information security. To that end, the business continuity site in Hyderabad was opened and became fully operational in 2017. OSBI prides itself on excellence in customer service and the ISO 9001: 2015 certified is a testament to meeting customer and regulatory requirements by providing outstanding customer service.

In compliance with the Modern Slavery Act, we do not support excessive overtime and our employees in India are encouraged to work in accordance with local legislation. Employees in our
Bangalore office enjoy a range of benefits which include 22 days of annual leave, 12 days' sick leave and cafeteria services.

Focused on the environment
OSB's Environmental policy states that we are committed to reducing our environmental impact and to continually improve our environmental performance
as an integral part of our business strategy. This policy ensures that we meet or exceed all relevant environmental obligations under law and regulation.

The Environmental policy is under review to include additional risk assessments and develop actions and measures to include the impact of environmental change on the Group's business activities, in addition to focusing on our impact
on the environment.

2019 was yet another year when the Group took on initiatives, or advanced existing ones, to achieve its goal of becoming a greener organisation.
OSB Greenhouse gas emissions

The Group is committed to promoting awareness of environmental issues amongst our employees. In 2019, OSB was successful in reducing single use plastic consumption by taking away unnecessary bins and installing large recycling stations across the estate. We now have a Green Committee, made up of volunteers,
our Green Ninjas, who actively support the policy.

OSB is active in attempting to reduce its carbon footprint and, in 2019, it introduced two electric vans which the Maintenance team use to travel between sites. Electric charging points are now also available for employees to use, encouraging the use
of electric vehicles.

CCFS operates an environmental management system that is certified to the internationally recognised ISO 14001 standard. This not only supports legal compliance but provides a framework for ongoing improvements.

In 2019, further progress was made on tackling CCFS' carbon footprint (see
Greenhouse gas emissions). This included undertaking an ESOS energy assessment, introducing a Cycle to Work scheme
and providing support for employees to choose ultra-low emissions vehicles. Improvements were also made to waste management and recycling by introducing reusable cups, enhancing segregation of waste and introducing
battery recycling. Employee engagement has been key, and CCFS rolled out online environmental awareness training, plus various communications and activities throughout the year, led by its enthusiastic Environmental Committee.

Across the Group, we have high-level environmental objectives to:

- Accept responsibility for contributing to the protection of the environment and strive to ensure that our actions will not detract from the long-term sustainability of environmental resources
- Minimise harmful emissions
- Promote advantageous environmental practices by all staff
- Consult with suppliers to improve the environmental impact of goods and services provided to the Group

OSB Greenhouse gas emissions


Emission source
Tonnes CO2e
Tonnes CO2e
Combustion of fuel 89 76
Operation of facilities 3 5
Purchased electricity 884 951
Total greenhouse gas emissions 976 1,032
Total emissions per employee 0.88 1.04

CCFS Greenhouse gas emissions


Emission source
Tonnes CO2e
Tonnes CO2e
Combustion of fuel 213 158
Operation of facilities 3 3
Purchased electricity 201 273
Total greenhouse gas emissions 417 434
Total emissions per employee 0.61 0.68
Purchase of renewable energy (50.4) n/a
Total net GHG emissions 366.6 n/a
Net emissions per employee 0.54 n/a

Fuel type Emissions conversion factor source
UK electricity – location based (excluding transmission and distribution), UK gas, diesel, R134-a, R32 and R22 F-gas Department for Environment, Food and Rural Affairs 2019–20
Overseas electricity http://www.carbon-calculator.org.uk/

Mandatory greenhouse gas report
Reporting scope
- Our methodology has been based on the principles of the Greenhouse Gas Protocol, taking account of the 2015 amendment which sets out a dual reporting methodology for the reporting of Scope 2 emissions. This means that UK electricity is reported using two methods.
- We have reported on all the measured emissions sources required under The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, except where stated.
- The period of our report is 01/01/2019 - 31/12/2019.
- This includes emissions under Scope 1 and 2, except where stated, but excludes any emissions from Scope 3.
- Conversion factors for UK electricity (location-based methodology), gas and other emissions are those published by the Department for Environment, Food and Rural Affairs for 2019/20.
- Conversion factors for UK electricity (market-based methodology) have been set as 0, due to the 100% renewable electricity tariffs which were in place throughout the 2019 year.
- The market-based methodology has only been applied to UK electricity supplies.
- Conversion factors for overseas electricity have been provided by the Government of India, taken from 2018.
- Conversion factors for overseas (India only) diesel usage are those published by the Department for Environment, Food and Rural Affairs for 2019/20.
- Conversion factors used for the reporting of F-Gases R22, R32 and R134-a are those published by the
Department for Environment, Food and Rural Affairs for 2019/20.
- The following emission IDs have been retired and are not included within the 2019 report:
Prestige Finance - gas meters 2978102004 (OSB-INV-04189-10-07- NAT-004) and 2978102105 (OSB- INV-04189-10-07-NAT-105) have
been disconnected and replaced by new gas meter (OSB-04189-10-07- GAS-104).
Maidstone - site closed in November 2017. Emission ID for electricity (OSB- INV-04189-10-05-ELE-841) retired.

- The following sites have been added to the portfolio during the 2019 reporting year: 30 Watersmeet and 51 Watersmeet.
- There has been a significant reduction in F-Gas recharges between 2018
and 2019 as no F-Gas recharges were required for any of the UK sites.
- There has been an increase in combustion, due primarily to the estimation applied to the Prestige site as no gas data was available for
the 2019 year, therefore benchmarking estimation based on office type and floor area has been applied (using TM46 benchmarks).
- There has been a reduction in emissions relating to purchased energy (electricity) which is due in large part to the lower 2019 carbon factor for location-based grid electricity, as electricity usage increased in 2019 to
2,314.5 MWh (from 2,180 MWh in 2018).

Statement of exclusions

- Global diesel/petrol use (for vehicles) has been excluded from the report on the basis that data is not available
for reporting. This is due to be reviewed for inclusion in future years.
- It has been confirmed that there is no LPG use within the estate, either in the UK or overseas.
- It has been confirmed that there is no mains gas supply in relation to the India operations.
- Two UK sites, Interbay and Fleet, continue to be excluded from reporting as these are managed rented properties with energy charged as a flat rate as part of a service charge and are therefore excluded on the basis of the financial control approach. Heritable
at Newman Street is a landlord site, but as data was available for reporting in the 2018 year, this data has been used as a direct comparison estimation for 2019 to ensure consistency.

Focused on our communities
We have a strong tradition of caring about our local communities. Each year, OSB engages with people across the UK and India, by taking part in a variety of charitable events and partnerships.

In 2019, the Group, including CCFS pre- Combination donations, raised £ 398,000 for its charity partners and our employees also volunteered their time to support a variety of community-based activities. OSBI is also heavily engaged within its local community in Bangalore through participation in

2019 marked the beginning of a new partnership with our current national charity partner, My Shining Star, Children's Cancer Charity, as well as the introduction of local charity partners for each of our brands. By partnering with national and local charities, we can offer employees the chance to make a difference, both nationwide and closer to home. By focusing our efforts on our nominated
charities, we can make a more meaningful impact to the lives of those that the charities support.

Throughout the year, we continued to enable employees to have an impact

The OSB Community Fund

As well as encouraging fundraising
and volunteering, we also offer financial support for causes close to our employees' hearts through our Community Fund initiative. Any employee can apply for funding on behalf of a registered charity or community project that they are actively involved with. A total of 34 applications were made in 2019, and we are hoping for even more in 2020, as the popularity of the scheme grows. The initiative, since being piloted successfully in OSB's UK offices,
has also now been introduced in India.

Our national charity partner

charitable causes and programmes

on the charities that matter to them,

that require critical assistance.

Giving something back

We are proud of our strong links with our local community, especially through the Kent Reliance brand, which has been synonymous with the county for over
150 years. As our employee numbers have grown, so has our commitment to give something back to our local communities.

Our community strategy is built primarily around three key pillars consisting of Volunteering, Fundraising and Community Investment, which provide a platform
for OSB to live its vision and values.

by encouraging an active hands on approach, through fundraising and volunteering opportunities. More employees than ever before used their Day to Make a Difference this year; this is a paid day to help support any registered charity or community group.
This is often linked to one of our local charity partners, for example our annual community-based campaign, Project Kent, that Kent Reliance runs alongside KMFM, or something close to the hearts of our employees. Furthermore, if employees choose to undertake additional fundraising activities, the Bank will match any funds raised up to a specific amount.

My Shining Star: Children's Cancer Charity
My Shining Star is a charity that supports families through the financial hardship associated with childhood cancer. Around 1,600 children are diagnosed with cancer in the UK every year.

Families spend an extra £ 600 per month, on average, during their child's cancer treatment (mainly for transport, food and accommodation) and many fall into debt as a result, or families become separated as siblings of the child are left at home.

The money we have raised throughout 2019 has gone directly to improving the lives of families in their darkest times.

Our local charity partners

Each of our locations supports our national charity partner by taking part in Group- wide fundraisers, but we also encourage our employees to support a charity on their doorstep. By engaging with charity champions at each location, we are able to ensure the views of each location are represented when a local charity partner was agreed. Our charity champions
have been instrumental in supporting our Giving Something Back initiative and have organised a number of fundraisers in support of our national and local charity partners.

Demelza Hospice Care for Children supported by Kent Reliance
Kent Reliance branches continue to support Demelza as their local charity partner, fundraising in branches and offering customers the dedicated Demelza Children's Account, whereby the charity receives an annual donation equivalent
to an agreed percentage of the combined funds held across the associated accounts at the end of the year.

Breast Cancer Haven, Wessex supported by InterBay Commercial Breast Cancer Haven is a centre in Titchfield, Hampshire. The charity provides free support and advice for those affected by breast cancer and their families, in a relaxing, non-clinical environment. This year, the team has raised money for Breast Cancer Haven through a variety
of fundraisers, including a sponsored fire-walk, tea party events, a summer festival and skydives.

Age UK Hertfordshire supported by Prestige Finance
Age UK Hertfordshire works tirelessly to help improve the lives of thousands of the elder generation. It is one of the largest charities providing services to the elderly in Hertfordshire, providing vital support for many people in need of later life care. Not only have the team been fundraising with events like their Easter charity bake sale, they've been getting hands on and volunteering in the local care home and taking part in a Strictly Come Dancing themed event.

Shooting Star Children's Hospices supported by InterBay Asset Finance Shooting Star Children's Hospices supports 700 life-limited babies, children and young people living in London and Surrey, and their families. Bespoke support is available 365 days a year at their two purpose-built children's hospices, as well as in families' own homes at no cost to them. As our newest local charity partner, joining us
in October, OSB employees have already helped Shooting Star to move items from its old warehouse, to a new fit-for- purpose facility, so they can store more equipment to help more people.

OSBI fundraising

Corporate social responsibility is extremely important to OSBI. The concept of helping society is embedded in its corporate governance structure through its Corporate Social Responsibility (CSR) Policy and also through employee engagement.

As part of the OSBI CSR Policy, funds are kept aside each year to spend on social causes. This is governed by a CSR Committee and implemented by the
Corporate and Social Responsibility Group. The focus is to help and contribute in areas where there is critical need and within
the office locality so they are also able to contribute their time.

In 2019, the CSR Group continued to support the areas of child welfare, education and healthcare.

Child welfare and education
OSBI has partnered with SOS Children's Village, located in Bangalore, to fund education, food, clothing and housing for 20 orphans. Working together with SOS, OSBI employees helped to provide support for the holistic development of orphans and women and children belonging to vulnerable families. OSBI also hosted some events at SOS for employees to spend time with the children, which was highly appreciated by both the children and employees.

OSBI is currently supporting HBS Hospital to provide dialysis sessions to 40 individuals who live below the poverty line. OSBI has also contributed two dialysis machines which can provide over 11,000 dialysis sessions over a period of five years. HBS Hospital is a non-profit hospital which provides critical healthcare to members
of society who could otherwise not afford the care they need.

OSBI also continued to support maintaining the gardens at CV Raman General Hospital for the second year. Hospital workers and patients have appreciated the positive impact such a space has had on patients, their relatives and the hospital staff.

CCFS and the community

Giving back
CCFS has established itself as one of the local area's largest and fastest growing employers, now employing 684 people primarily in Wolverhampton. Providing support to our community is an important part of our overall strategy. Every year we ask our employees to nominate a local charity that they would like us to support. This decision is made by the Charity Committee with final approval from
the CEO.

In 2019, we raised over £ 92k for Socks and Chocs, a local charity that supports the homeless in the West Midlands
and beyond. In addition to our existing charitable contributions which have totalled £ 373k since 2008, CCFS offers a Good Causes fund that can be used towards special charity events being undertaken by, or linked to, employees or their families. In addition, we have
longstanding relationships as supporters of local cricket and rugby clubs, and CCFS and its brands are passionate supporters of the local community. This year, Charter Savings Bank increased its focus on supporting overlooked and underserved UK communities through new partnerships with local sports clubs.

Working alongside both Coventry Rugby Club and Wolverhampton Rugby Club, we are actively demonstrating the values we share with our customers.

Coventry Rugby Club
In 2019, Charter Savings Bank entered into a new partnership with Coventry Rugby Club, focusing on inspiring young children through two important initiatives: Rugby and Reading, and Rugby in Schools.

Rugby and Reading is designed to inspire disadvantaged and disaffected children to read more. Our programme is led by members of Coventry's elite first team who go into schools to read books with children aged between 5 and 11, enabling them to exercise both body and mind
as they experience an hour of engaging storytelling before enjoying a hands-on game of tag rugby.

Rugby in Schools gives boys and girls aged between 5 and 16 access to coaching sessions delivered by one of Coventry's top performing first team players, providing one-to-one interactions with positive role models as well as receiving professional coaching.

As title partners for both programmes, we have committed to support over 100 hours of rugby-based learning activity in total a fantastic opportunity for children in local schools.

In addition to the two programmes, CSB is supporting Coventry Rugby's charitable Foundation with their efforts to improve the lives of children currently living in
poverty across the city, by providing access to a Match Day Experience and supporting their Project:500 initiative.

Match Day Experience gives 40 disaffected and disadvantaged children the opportunity to attend a live Championship rugby game, enjoy a tour of the ground, take part in a pre-game coaching session on the pitch and participate in a Q&A with first team players.

Project:500 aims to use rugby to drive positive engagement with children living in poverty, giving 500 disadvantaged and disaffected children the chance to learn through sport and give them an opportunity to be part of a positive and inclusive community. CSB has funded spaces for children on the programme, with the first event in October reported as a major success and the first step
in Coventrys goal to lift children out of poverty.

Wolverhampton Rugby Club
In November 2019, Charter Savings Bank and Wolverhampton Rugby Club announced an extension to their longstanding partnership, reinforcing the Bank's commitment to the
Club's development.

To mark the occasion, CSB upgraded the Club's Castlecroft base with a brand-new pitch-side electronic scoreboard, which will now provide up-to-the-minute information for over 200 grassroots rugby fans
each week.

Since the partnership began, the Bank has been keen to ensure its support makes
a real difference.

In 2016, it was instrumental in providing significant funds towards renovations to Wolverhampton's changing room facilities, which are now used by up to
15 of Wolverhampton's male and female development teams.

By partnering for a further five years, CSB is helping the club provide grassroots sporting opportunities for the local community for both male and female
players, across a wide-range of ages, and for their loyal supporters in the local area.

Looking forward to 2020

As OneSavings Bank and Charter Court Financial Services have now come together, we will be looking to bring together the best of all of our community activities, and continue to support our people in fulfilling their passions to support matters that are close to their hearts.

Section 172 statement
Section 172 of the Companies Act 2006 requires a Director of a company to act in the way he or she considers, in good
faith, would be most likely to promote the success of the company for the benefit
of its members as a whole. In doing this, section 172 requires a Director to have regard, among other matters, to: the likely consequences of any decision in the long term; the interests of the
company's employees; the need to foster the company's business relationships with suppliers, customers and others; the impact of the company's operations on the community and the environment; the desirability of the company maintaining a reputation for high standards of business conduct; and the need to act fairly with members of the company.

The Directors give careful consideration
to the factors set out above in discharging their duties under section 172. The stakeholders we consider in this regard are our employees, our customers, our shareholders, the regulators and the local communities in which we are located.

The Board recognises that building strong relationships with our stakeholders will help us to deliver our strategy in line with our long-term values, and operate the business in a sustainable way.

Stakeholder engagement

The Board is committed to effective engagement with all of its stakeholders. The Board and its Committees regularly receive reports from management
on issues concerning customers, the environment, communities, suppliers, employees, regulators and investors, which they take into account in their discussions and in their decision-making process under section 172.

The Board and its Committees undertake deep dive reviews to further develop their understanding of key issues impacting all stakeholders. In addition to this, the Board seeks to understand the interests and views of the Group's stakeholders by engaging with them directly as appropriate. Some of the ways in which the Board has engaged directly with stakeholders over the year
are shown below.

Our customers are at the centre of what we do. During 2019, we ran a special campaign focusing on different customer groups. The campaign focused on bringing the customers to life through life-sized cardboard cut-outs in the office and video clips telling their stories. These customers were then used to generate discussions on the needs of such customers and
how the best outcome can be achieved for them. The campaign generated numerous conversations and insights into how customer service can be tailored to maximise customer experience. More information on our customers is provided on page 76.

In addition to the Board receiving updates from senior management on various metrics and feedback tools in relation to employees, members of the Board engage with the Group's employees in a variety
of ways. A Workforce Advisory Forum (OneVoice) was established and Mary McNamara serves as the designated Non- Executive Director representing the view of employees. Other Non-Executive Directors and members of the Group Executive Committee are also encouraged to attend OneVoice on a rotating basis. More details on OneVoice are provided on page 145
in the Corporate Governance Report. Further information on engagement with employees is provided on pages 77.

The Board regularly receives updates on feedback from investors from senior management. In addition, various members of the Board, including the Chairman and Chair of the Group
Remuneration Committee meet frequently with institutional investors to discuss
and provide updates about and seek feedback on the business, strategy, long-term financial performance and the Directors' Remuneration Policy. Members of the Board also met shareholders at the AGM, as well as receiving briefings from the Group Head of Investor Relations
on shareholders. Further information on feedback from institutional investors in relation to the Remuneration Policy
is provided on page 144.

Members of the Board regularly meet with the Group's regulators. There was increased engagement with regulators during 2019, due to the Combination. Since the Combination, the Group has moved to a Level 2 firm, as designated by the Financial Conduct Authority (FCA). This means that the number
of interactions with regulators will increase for 2020 and beyond.


We set out below an example of how the Directors have had regard to the matters set out in section 172(1)(a) to (f) when discharging their duties under section 172 and the effect of the decisions taken by them. The most significant decision taken during 2019 was the Combination with CCFS. The Board carefully weighed the benefits of the Combination for investors, customers, employees and the company (which are outlined on page 5) against any impact on those stakeholders.

The financial consequences of the Combination were assessed by the Board and independently challenged by external advisers. The Board also considered the operational consequences of the decision and the resources needed to achieve the desired outcomes; this included meeting the expectations of our regulators. On balance, the Board considered that the benefits of the Combination outweighed the detriment to certain stakeholders and the risk associated with the transaction.

Non-financial information statement
In the 2019 Annual Report, OSB Group has addressed the requirements of sections 414CA and 414CB of the Companies Act 2006 relating to non-financial reporting. The table below summarises key disclosure requirements and provides references to where further information can be found, which taken together form the 2019 Non-financial information statement.





Due diligence


Section within the
Annual Report
Environmental matters          
Description inc. objectives

OSB’s Environmental Policy sets out commitment to reducing our environmental impact and to continually improve our environmental performance as an integral part of our business strategy. This policy seeks to ensure that we meet or exceed all relevant environmental obligations under law and regulation.
  How reviewed and by whom and how frequently

The policy is approved annually by the Group Nomination and Governance Committee. It has an accountable executive and it is reviewed
by the Group Executive Committee before Board Committee approval.
  What actions were taken/ outputs of actions

There are ongoing initiatives, which are described in this corporate responsibility report. This is part of an ongoing and developing set of environmentally
focused actions. The actions have resulted in outcomes during 2019 such as reduced single use plastic consumption.


Corporate responsibility report,
see page 84.
Description inc. objectives

The Flexible Working Policy outlines the approach of the Group to support flexible working for its employees. This is designed to improve engagement among staff and is also now an important recruitment offering.
  How reviewed and by whom and how frequently

The Chief Financial Officer is the accountable executive for the Group’s employee policies. The Group’s Governance Forum reviews these policies annually and they are approved annually by the Group Executive Committee.
  What actions were taken/ outputs of actions

The application of the Flexible Working Policy is managed by HR, who ensure consistency in its application. HR also report regularly to the Executive Committee on the take-up of flexible working arrangements in the Group.


Corporate responsibility report,
see page 82.
The Diversity and Inclusion Policy confirms   There is an accountable executive for the   Gender diversity is regularly measured  


Corporate responsibility report,
see page 81.
the Group’s commitment to encourage and Diversity and Inclusion Policy. The Group and reported in the organisation and
promote diversity, equality and inclusion, Executive Committee reviews this policy externally. Hiring and promotion processes
and promote a culture that actively values annually and they are approved annually are monitored to ensure suitable male
difference and recognises that individuals by the Group Nomination and Governance and female candidates are presented for
from different backgrounds and experience Committee. all roles. This has resulted in more gender
can bring valuable insights into the Group   balanced hiring and recruiting decisions.
and enhance the way in which we work.   Both OSB and CCFS have achieved external
    disability confident recognition. The Group
    will continue to work on promoting diversity
    and inclusion across a broader range
    of measures in the future.
The Health and Safety Policy ensures that the Group complies with legislation to protect
its employees and customers and provide a suitable and safe environment for customers, employees and anyone affected by the Group’s operations.
  There is an accountable executive for the Health and Safety Policy. The
Policy is reviewed annually by the various Committees and approved by the Board.
  Health and safety statistics are reported to the Board on a regular basis through the year.

Annual health and safety training is completed by all employees. The Group also conducted a review of the entire real estate portfolio in 2019, which resulted in actions to continue to improve employee health and safety.


Corporate responsibility report,
see page 81.





Due diligence


  Section within the
Annual Report
Social matters            
Description inc. objectives

The Vendor Management and Outsourcing Policy outlines the core requirements which must be met by the Group and provides
a structure to efficiently manage potential and contracted third party relationships with service providers and compliance with the specific regulatory obligations.
  How reviewed and by whom and how frequently

The Group Chief Operating Officer is the accountable executive. The Vendor
Management Committee reviews these policies annually and they are approved by the Risk Management Committee.
  What actions were taken/ outputs of actions

The Group operate robust assurance processes in relation to these policies as described further in the report.

The Lending Policy sets out the assessment of a prospective customer’s ability
and willingness to repay a mortgage and determines the adequacy of the security offered.
  The Group Chief Credit Officer is the accountable executive. The Credit Committee reviews the policy annually and it is approved by the Group Risk Committee.   The Group Risk Committee challenges how the policy is applied to ensure that the right outcomes are achieved.    

The Complaints Handling Policy outlines at a high level the Group’s regulatory
expectations from a complaint handling in a customer-centric and complaint perspective.
  The Group Chief Operating Officer is
the accountable executive. The Operations Committee reviews the policy annually and it is approved by the Risk Management Committee.
  The number of complaints and how long it took us to resolve them forms part of the management and Board monthly reporting packs and an annual report of complaints is presented to the Board. Low levels of complaints were indicated during 2019 with a maximum result in the Business Balanced Scorecard.    

The Vulnerable Customer Policy sets the standards and approach for the identification and treatment of vulnerable customers and provides guidance to all areas of the Group
to ensure vulnerable customers consistently receive fair outcomes.
  The Group Chief Credit Officer is the accountable executive. The Vulnerable Customer Review Committee reviews the policy annually and it is approved by the Risk Management Committee.   A new training programme has been developed to focus on more complex customer scenarios including identifying vulnerable customers and how best to serve them and their changing needs.    

The Data Protection Policy ensures that there are adequate policies and procedures for ensuring the Group’s compliance with the General Data Protection Regulation and confirms the necessary steps that should be taken to protect personal data.   The Group General Counsel and Company Secretary is the accountable executive. The Data Governance Forum reviews the policy annually, which is then approved by the Group Risk Committee. The Data Protection Officers for both CCFS and OSB report twice a year to the Group Executive Committee and the Board regarding compliance with the Data Protection Policy and customer data requests.   Additional new controls were introduced in 2019.    

The Arrears, Repossessions and Forbearance Policy covers policies and procedures in place to deal with cases of arrears, including those more serious cases of arrears which result in the Group taking possession of and selling
a mortgaged property.
  The Group Chief Credit Officer is the accountable executive. The Credit Committee reviews the policy annually and it is approved by the Risk Management Committee.   The Group Risk Committee challenged and approved updates to policies Including, the Group Lending Policy, the Arrears,
Repossessions and Forbearance Policies and the Loan Impairment Provisioning Policy.







Due diligence


  Section within the
Annual Report
Respect for human rights            
Description inc. objectives

The Whistleblowing Policy is designed to ensure that employees can raise their
concerns about wrongdoing or malpractice within the Group, without fear of victimisation, subsequent discrimination
or dismissal.
  How reviewed and by whom and how frequently

The Group General Counsel and Company Secretary is the accountable executive and the Chair of the Group Audit Committee is directly accessible to all employees with whistleblowing concerns. The Group Audit Committee reviews the policy annually and it is approved annually by the Board.

There are also quarterly reports to the Board Audit Committee regarding whistleblowing reports.
  What actions were taken/ outputs of actions

The Group regularly promotes awareness of the Whistleblowing Policy throughout the year.

The Modern Slavery Statement sets out the steps taken by the Group to ensure there is no slavery in our operations and supply chains.   The Chief Risk Officer is the accountable executive. The Risk Management Committee and Group Executive Committee review the statement annually and it is approved annually by the Board. The Group continues to classify suppliers as low, medium and high risk in relation to modern slavery and enhanced due diligence is applied to suppliers and contractors deemed high risk.   Over the year, no instances of modern slavery were reported and we continue to ensure all relevant employment policies have direct consideration to the risk of modern slavery.    

Anti-corruption and anti-bribery matters
Description inc. objectives

The Anti-Bribery and Corruption Policy aims to provide employees and contractors with a clear set of guidelines to ensure the Group conducts its activities in an ethical and appropriate manner as well as complying with the laws and regulations of each jurisdiction in which it operates.
  How reviewed and by whom and how frequently

The Chief Risk Officer is the accountable executive. The Risk Management Committee reviews the policy annually and
it is approved by the Group Audit Committee. Mandatory annual training is applied to all employees regarding the Anti-Bribery and Corruption Policy.
  What actions were taken/ outputs of actions

The Group does not consider itself to be high risk regarding bribery and corruption and there were no bribery or corruption issues identified during 2019.

Vendor Management and Outsourcing Policy
– see above.


The Conflict of Interest Policy provides guidance around managing conflicts of interest under the Financial Conduct
Authority (‘FCA’) regulations, the Companies Act 2006, and the FCA High Level Standards
– the Senior Management Systems and Controls (‘SYSC’).
  The Group General Counsel and Company Secretary is the accountable executive. The Risk Management Committee reviews the policy annually and it is approved by the Group Executive Committee. Group Compliance maintain gifts and hospitality and conflicts registers, which are reviewed annually by the Risk Management Committee and the Group Nomination and Governance Committee.
External directorships and interests of NEDs are also reviewed annually by the Group Nomination and Governance Committee.
  There were no breaches of the conflicts of interest policy during 2019.    


                                    Anti-corruption and anti-bribery matters continued

Section within the
Annual Report

Description inc objectives

The Anti-Money Laundering and Counter Terrorist Financing Policy provides a consistent approach throughout the Group to the deterrence and detection of those suspected of laundering the proceeds
of crime or those involved in the funding of terrorism and the relevant disclosure to the necessary authorities.

How reviewed and by whom and how frequently

The Chief Risk Officer is the accountable executive. The Risk Management Committee reviews the policy annually and it is approved by the Group Audit Committee. All employees must complete mandatory anti-money laundering training annually.

What actions were taken/ outputs of actions

There were no instances of money laundering during 2019.

Risk review,
see page 115.

Description of business model

                  Description of principal risks

Non-financial key performance indicators

This Strategic report is approved by the Board and signed on its behalf by:

Jason Elphick
Group General Counsel and Company Secretary
19 March 2020


Directors' Report
Board of Directors 96
Group Executive team 98
Corporate Governance Report 100
Group Nomination and Governance Committee Report 109
Group Audit Committee Report 112
Group Risk Committee Report 118
Other Committees 121
Directors' Remuneration Report 122
Directors' Report: Other information 145
Statement of Directors' responsibilities 147

How our Board and Executive team set the strategic direction and provide oversight and control.

Key reads within this section:
Corporate Governance Report

We are pleased to report full compliance

For more information See page 100

Group Risk Committee Report
We continued to enhance and integrate the Strategic Risk Management Framework

For more information See page 118

Group Remuneration Report
Extensive engagement with shareholders

For more information See page 144

Board of Directors (biographies)


David Weymouth

David was appointed to the Board in September 2017 and held the position of Chairman until October 2019. He was
re-appointed as Chairman on 4 February 2020.

Committee membership
Chair of the Board Integration and of the Group Nomination and Governance Committees; a member of the Group Remuneration Committee.
Experience and qualifications
David was previously Chief Information Officer at Barclays Bank plc and Chief Risk Officer at RSA Insurance Group plc. He sat on the Executive Committee of both
companies. He served as a Non-Executive Director of Bank of Ireland (UK) plc. His experience as an executive includes a wide range of senior roles in operations, technology, risk and leadership. David
is also Chairman of Mizuho International Plc and his other current Non-Executive directorships include Fidelity International Holdings (UK) Limited and The Royal London Mutual Insurance Society.
Key skills
David has over 40 years' experience in the financial services industry and has a degree in Modern Languages from University College London and an MBA from the University of Exeter.

Andy Golding
Chief Executive Officer

Andy was appointed to the Board in December 2011.

Committee membership Member of the Board Integration Committee.
Experience and qualifications
Andy was previously CEO of Saffron Building Society, where he had been from 2004. Prior to that he held senior positions at NatWest, John Charcol and Bradford & Bingley. Andy currently holds a number of posts with industry institutions, including membership of the UK Finance Executive Committee.
He is also a Director of the Building Societies Trust and has served as a Non- Executive Director for Northamptonshire NHS and Kreditech. Andy was a member of the Building Societies Association's Council; and of the Financial Conduct Authority's Small Business Practitioners Panel until October 2019.
Key skills
Andy has over 30 years' experience in financial services.

Noel Harwerth1
Senior Independent Director

Noel Harwerth
Noel was appointed to the Board and the position of Senior Independent Director in October 2019.

Committee membership
Member of the Group Nomination and Governance, Group Remuneration and Group Risk Committees.
Experience and qualifications
Noel was appointed to the Board of CCFS in June 2017 and was its Senior Independent Director from August 2017. Noel is a Non- Executive Director of Scotiabank Europe plc and Sirius Minerals plc. She is a former Non-Executive Director of Standard Life Aberdeen plc and RSA Insurance Group plc, prior to which she held a variety of senior roles with Citicorp for 15 years, latterly serving as the Chief Operating Officer of Citibank International. Noel's prior non- executive roles also include GE Capital Bank Limited, Sumitomo Mitsui Banking
Corporation Europe Avocet Mining, Alent plc, Corus, Logica, The London Metal Exchange and Standard Life Assurance Limited.
Key skills
Noel has extensive experience in both
the public sector with government bodies and the private sector with global banking companies, which brings valuable insight to the boardroom debate.

April Talintyre
Chief Financial Officer

April joined the Bank in May 2012 and was appointed to the Board in June 2012.

Committee membership Member of the Group Models and Ratings Committee.
Experience and qualifications
April was previously an Executive Director in the Rothesay Life pensions insurance business of Goldman Sachs and worked for Goldman Sachs International for over
16 years, including as an Executive Director in the Controllers division in London
and New York. April began her career
at KPMG in a general audit department.
Key skills
April has broad financial services experience. She has been a member of the Institute of Chartered Accountants in England and Wales since 1992.

Graham Allatt1
Non-Executive Director
Graham was appointed to the Board in May 2014.

Committee membership
Chair of the Group Risk Committee and the Group Models and Ratings Committee; a member of the Group Audit Committee.
Experience and qualifications Graham was previously Acting Group Credit Director at Lloyds TSB and Chief Credit Officer at Abbey National. Prior
to this he spent 18 years in the NatWest Group culminating in the role of Managing Director, Credit Risk at NatWest Markets.
A Fellow of the Institute of Chartered Accountants, Graham was involved with housing associations for nearly 30 years as Treasurer and Board member in the North of England and in London.
Key skills
Graham has significant banking, credit risk and financial services experience.

Rajan Kapoor1
Non-Executive Director

Rajan was appointed to the Board and the position of Chair of the Group Audit Committee in October 2019.
Committee membership
Chair of the Group Audit Committee and member of the Board Integration, Group Remuneration, Group Risk and Group Models and Ratings Committees.
Experience and qualifications
Rajan was appointed to the Board of CCFS in September 2016. He was Financial Controller of the Royal Bank of Scotland (RBS) Group and held a number of senior finance positions in a 28-year career with RBS. Rajan is a Fellow of the Institute
of Chartered Accountants and of the Chartered Institute of Bankers in Scotland.
Key skills Rajan has wide-ranging experience of all aspects of banking including external
reporting, financial planning and analysis, asset and liability management, taxation and stress testing. He also has extensive experience of financial and regulatory reporting in the UK and US with a strong background in internal financial controls, governance and compliance.

Sarah Hedger1
Non-Executive Director
Sarah was appointed to the Board in February 2019.Committee membership Member of the Group Audit, Group Remuneration and Board Integration Committees.
Experience and qualifications
Sarah held leadership positions at General Electric for 12 years in its Corporate, Aviation and Capital business development teams, leaving General Electric as Leader of Business Development and M&A for its global GE Capital division. Prior to General Electric, she worked at Lazard & Co., Limited for 11 years, leaving as Director, Corporate Finance and spent five years as an auditor at PwC. Sarah is an Independent Non-Executive Director of Balta Group NV, a Belgian company listed on Euronext.
Key skills
Sarah has significant capital management and mergers and acquisitions experience in financial services. She is a qualified chartered accountant.

Mary McNamara1
Non-Executive Director

Mary was appointed to the Board in May 2014.

Committee membership
Chair of the Group Remuneration Committee and member of the Group Nomination and Governance Committee.
Experience and qualifications
Mary is a Non-Executive Director of Motorpoint plc and, until December 2019, of Dignity plc. She was previously CEO of the Commercial Division and Board Director of the Banking Division at Close Brothers Group PLC. Prior to that, Mary was Chief Operating Officer of Skandia, the European arm of Old Mutual Group. Mary spent 17 years at GE Capital, running a number of businesses including GE Fleet Services Europe and GE Equipment Finance.
Key skills
Mary h
1 Independent Non-Executive Director.as broad senior management experience in the banking and finance sectors.

Group Executive team (biographies)

A strong core team

Jens Bech
Group Commercial Director

Experience and qualifications
Jens joined the Bank as Chief Risk Officer in 2012, before becoming Group Commercial Director
in 2014.
Jens joined the Bank from the Asset Protection Agency, an executive arm of HM Treasury, where he held the position of Chief Risk Officer. Prior to joining the Asset Protection Agency, Jens spent nearly a decade at management consultancy Oliver Wyman where he advised
a global portfolio of financial services firms and supervisors on strategy and risk management. Jens led Oliver Wyman's support of Iceland during the financial crisis.

Alan Cleary
Group Managing Director, Mortgages

Experience and qualifications
Alan joined the Bank following the Combination with CCFS in October 2019.
Alan was the Managing Director at Precise Mortgages, and a co-founder of that business. Alan is responsible for Group mortgage product development, marketing and originations.
Alan has worked in the mortgage industry for over 25 years. He was Head of Sales at BM
Solutions from inception in 2001 to 2005 when he became Director of Halifax Intermediaries, the largest intermediary mortgage brand in the UK at the time.

Richard Davis
Chief Information Officer

Experience and qualifications
Richard joined the Bank in 2013.
Richard has worked in financial services for 20 years, rising to Chief Information Officer at GE Money UK in 2004.
He subsequently helped launch MoneyPartners (an Investec subsidiary), as IT Director, through to the eventual sale to Goldman Sachs. Prior
to joining the Bank, Richard worked for four years at Morgan Stanley covering IT, Projects and Transaction Management for the European residential business as an Interim Director.

Peter Elcock
Chief Risk Officer, CCFS

Experience and qualifications
Peter joined the Bank following the Combination with CCFS in October 2019.
Peter is responsible for the CCFS Risk. He has over 39 years of experience in financial services, having held a number of senior positions in financial institutions, including 27 years at
Barclays plc in a variety of roles and most latterly at director level leading risk management strategy and change. He was previously the
Chief Risk Officer at Coventry Building Society.

Jason Elphick
Group General Counsel and Company Secretary

Experience and qualifications
Jason joined the Bank in June 2016.
Jason has over 25 years of legal private practice and in-house financial services experience.
Jason's private practice experience was primarily in Australia with King & Wood Mallesons and in New York with Sidley Austin LLP and he has been admitted to practice in Australia, New York and England and Wales.
Jason's in-house financial services experience was most recently as Director and Head of Bank Legal at Santander in London. Prior to this Jason held various roles at National Australia Bank, including General Counsel Capital and Funding,
Head of Governance, Company Secretary and General Counsel Product, Regulation and Resolution.

John Gaunt
Group Chief Information Officer

Experience and qualifications
John joined the Bank following the Combination with CCFS in October 2019.
John held the position of Director of IT and Change Management at CCFS and had
responsibility for the operational and tactical delivery of all business matters relating to information technology, information security and change management.
With over 19 years' experience in information technology, information security and change management within the financial services sector, John has held a number of senior IT roles within Nationwide Building Society and Derbyshire Building Society.

Hasan Kazmi
Chief Risk Officer, OSB

Experience and qualifications
Hasan joined the Bank in September 2015 as Chief Risk Officer.
Hasan has over 19 years of risk experience having worked at several financial institutions, including Barclays Capital, Royal Bank of Canada and Standard Chartered Bank. Prior to joining the Bank, Hasan was a Senior Director at Deloitte within its Risk and Regulatory practice with responsibility for leading the firm's enterprise risk, capital, liquidity, recovery and resolution practice. Hasan graduated from the London School of Economics with a MSc in Systems Design and Analysis and a BSc in Management.

Clive Kornitzer
Group Chief Operating Officer

Experience and qualifications
Clive joined the Bank in 2013. Clive has over 25 years of financial services experience, having worked at several financial organisations including Yorkshire Building Society, John Charcol and Bradford and Bingley.
Prior to joining the Bank, Clive spent six years at Santander where he was the Chief Operating
Officer for the intermediary mortgage business. Clive has also held positions at the European Financial Management Association and has been the Chair of the FS Forums Retail Banking
Sub-Committee. Clive is a Fellow of the Chartered Institute of Bankers.

Lisa Odendaal
Group Chief Internal Auditor

Experience and qualifications
Lisa joined the Bank in April 2016.
Prior to joining the Bank, Lisa worked for Grant Thornton where she was an Associate Director responsible for leading several outsourced audit functions within the Business Risk Services division.
Lisa is a qualified Chartered Internal Auditor and has over 25 years of internal audit and
operational experience gained in the UK, UAE and Switzerland, having worked at several financial institutions, including PwC, Morgan Stanley, HSBC and Man Group.

Paul Whitlock
Group Managing Director, Savings
Experience and qualifications
Paul joined the Bank following the Combination with CCFS in October 2019.
Paul was an Executive of Charter Savings Bank. Paul brings specialist knowledge of the savings market and is responsible for all aspects of the Group's savings strategy, products, propositions, sales, distribution and operations.
With over 20 years of UK and international experience in the retail banking industry, including senior positions at First Direct, HSBC and Shawbrook Bank, Paul has extensive experience delivering banking products
to the consumer market.

Richard Wilson
Group Chief Credit Officer

Experience and qualifications
Richard joined the Bank in 2013.
Prior to joining the Bank, Richard was head of the credit function for Morgan Stanley's UK origination business and subsequently looked after the Credit and Collections strategy within its UK, Russian and Italian businesses. Between 1988 and 2006, Richard held various roles at Yorkshire Building Society, including the position of Mortgage Application Centre Manager.

Corporate Governance Report

Dear Shareholder,
The statement of corporate governance practices, including the Reports of Committees, set out on pages 109 to 144 and information incorporated by reference, constitutes the Corporate Governance Report of
OneSavings Bank.

UK Corporate Governance Code (the Code)

Compliance Statement
During 2019, the Company applied the principles
and complied with the applicable provisions of the Code.

The Code is available at www.frc.org.uk.

1 Independent Audit Limited has no other connection with the Company or individual Directors.

David Weymouth
Non-Executive Chairman
19 March 2020

I am pleased to present to you the Company's Corporate Governance Report for 2019, and to report full compliance throughout the year with the Code as updated in 2018.

This is my first report to you following the Combination with CCFS. The Board continues to be committed to the highest standards of corporate governance and considers that good corporate governance is essential to provide the Executive team with the environment and culture in which to drive the success of the business. In a year of considerable uncertainty relating to Brexit, a key focus of the Board has been on the Combination with CCFS and governance has been and will continue to be a key aspect.

Just prior to the Combination, the Board and its Committees undertook an external evaluation facilitated by Independent Audit Limited1(Independent Audit), details of which are set out in the Report on page 107. The review concluded that the Board and its Committees continue to operate effectively.

I would like to welcome Directors who joined the Board on
4 October 2019; Tim Brooke, Noel Harwerth, Rajan Kapoor and Ian Ward. Sir Malcolm Williamson served on the Board from
4 October 2019 until 4 February 2020. Noel Harwerth was appointed as the Senior Independent Director, succeeding Rod Duke. Rajan Kapoor was appointed as Chair of the Group Audit Committee, succeeding Eric Anstee. I would like to thank Sir Malcolm Williamson, Eric Anstee and Rod Duke, who have left the Board since the Combination. I would also like to thank Tim Brooke, Margaret Hassall and Ian Ward, who are not seeking election or re-election at the AGM, for their service and contributions.

The Investor Relations function continues to assist the Board in developing a programme of meetings and presentations to both institutional and private shareholders, details of which are also set out in the Report below. We welcome shareholders to attend the AGM, which will be held at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY on 7 May 2020 at 11am.

The role and structure of the Board

The Board of Directors (the Board) is responsible for the long- term success of the Company and provides leadership to the Group. The Board focuses on setting strategy and monitoring performance and ensures that the necessary financial and human resources are in place to enable the Company to meet its objectives. In addition, it ensures appropriate financial
and business systems and controls are in place to safeguard shareholders' interests and to maintain effective corporate governance. The Board now also has a particular focus on integration matters.

The Board is responsible for setting the tone from the top in relation to conduct, culture and values, for ensuring continuing commitment to treating customers fairly, carrying out business honestly and openly and preventing bribery, corruption, fraud or the facilitation of tax evasion.

The Board operates in accordance with the Company's Articles of Association (the Articles) and its own written terms of reference. The Board has established a number of Committees as indicated in the chart on page 56. Each Committee has its own terms of reference which are reviewed at least annually. Details of each Committee's activities during 2019 are shown in the Group Nomination and Governance, Group Audit, Group Risk, Group Remuneration, Group Models and Ratings and Board Integration reports on pages 109 to 144.

The Board retains specific powers in relation to the approval of the Bank's strategic aims, policies and other matters, which must be approved by it under legislation or the Articles. These powers are set out in the Board's written terms of reference and Matters Reserved to the Board which are reviewed at least annually.

A summary of the matters reserved for decision by the Board is set out below:

Strategy and management
- Overall strategy of the Group
- Approval of long-term objectives
- Approval of annual operating and capital expenditure budgets
- Review of performance against strategy and objectives
Structure and capital
- Changes to the Group's capital or corporate structure
- Changes to the Group's management and control structure
Risk management
- Overall risk appetite of the Group
- Approval of the Strategic Risk Management Framework
Financial reporting and controls
- Approval of financial statements
- Approval of dividend policy
- Approval of significant changes in accounting policies
- Ensuring maintenance of a sound system of internal control and risk management
- Determining the remuneration policy for the Executive Directors
- Oversee the introduction of new share incentive plans or major changes to existing plans
Corporate governance
- Review of the Group's overall governance structure
- Determining the independence of Directors
Board members
- Changes to the structure, size and composition of the Board
- Appointment or removal of the Chairman, Chief Executive Officer, Senior Independent Director and Company Secretary
- The making of political donations
- Reviewing the overall levels of insurance for the Group


In line with the Code provisions, the Board ensures that a
fair, balanced and understandable assessment of the Group's position and prospects is presented in all financial and business reporting. The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives and maintains sound risk management and internal control systems. The Board has established formal and transparent arrangements for considering how it should apply the corporate reporting, risk management and internal control principles and for maintaining an appropriate relationship with the Group's auditors.

Financial and business reporting

The Board is committed to ensuring that all external financial reporting presents a fair, balanced and understandable assessment of the Group's position and prospects. To achieve this, the Board reviews each report and considers the level of consistency throughout; whether there is a balanced review of the competitive landscape; the use of sufficiently simple language; the analysis of risks facing the business; and that there is equal prominence given to statutory and alternative
performance measures. The Board has established a Group Audit Committee to assist in making its assessment. The activities of the Group Audit Committee are set out on pages 112 to 117.

Risk management and internal control

The Board retains ultimate responsibility for setting the Group's risk appetite and ensuring that there is an effective Strategic Risk Management Framework to maintain levels of risk within the risk appetite. The Board regularly reviews its procedures
for identifying, evaluating and managing risk, acknowledging that a sound system of internal control should be designed to manage rather than eliminate the risk of failure to
achieve business objectives.

The Board has carried out a robust assessment of the principal risks facing the business, including those that would threaten its business model, future performance, solvency or liquidity. Further details are contained in the viability statement on pages 73 and 74.

The Board has established a Group Risk Committee to which it

Further details of the Group's risk management approach, structure and principal risks are set out in the Group Risk review on pages 52 to 72. The Board has delegated authority to the Group Audit Committee for reviewing the effectiveness of the Company's internal control systems including oversight of financial reporting processes. The Group Audit Committee is supported by the Internal Audit function in discharging this responsibility, and receives regular reports from the Group Chief Internal Auditor
as to the overall effectiveness of the control system within the Group. The Group Audit Committee also receives reports from the external auditors on control matters. Details of the review of the effectiveness of the Company's internal control systems are set out in the Group Audit Committee report on page 115.

Control environment

The Group is organised along the three lines of defence model to ensure at least three stages of independent oversight to protect the customer and the Group from undue influence, conflict of interest and poor controls.

The first line of defence is provided by the operational business lines which measure, assess and control risks through the day to day activities of the business within the frameworks set by
the second line of defence. The second line of defence is provided by the Risk, Compliance and governance functions which include the Board and Group Executive Committee. As noted above,
the Board sets the Company's risk appetite and is ultimately responsible for ensuring an effective Strategic Risk Management Framework is in place. The Compliance function maintains the key controls framework which tracks and reports on key controls within the business to ensure compliance with the main provisions of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) handbooks. Policy documents also include key controls that map back to the key controls framework. The third line of defence is the Internal Audit function.

The Board is committed to the consistent application of appropriate ethical standards, and the Conduct Risk Policy sets out the basic principles to be followed to ensure ethical considerations are embedded in all business processes and decision-making forums. The Group also maintains detailed policies and procedures in relation to the prevention of bribery and corruption, and a Whistleblowing Policy.


has delegated authority for oversight of the Group's risk appetite,

risk monitoring and capital management. The Group Risk Committee provides oversight and advice to the Board on current risk exposures and future risk strategy and assists the Board
in fostering a culture within the Group, which emphasises and demonstrates the benefits of a risk-based approach to internal control and management.

The Directors who served during the year are listed in the table on page 103. Sir Malcolm Williamson, Tim Brooke, Noel Harwerth, Rajan Kapoor and Ian Ward were appointed on 4 October 2019. Sir Malcolm Williamson, Eric Anstee and Rod Duke ceased to be Directors on 4 February 2020. Tim Brooke, Margaret Hassall and Ian Ward will not stand for election or re-election at the AGM and will cease to be Directors on 7 May 2020.

The Board currently consists of 11 Directors; the Chairman, two Executive Directors and eight independent Non-Executive Directors (NEDs). The biographies of the Directors (excluding
NEDs stepping down from the Board) can be found on pages 96 and 97.

Board meetings and attendance

The Board met 13 times during the year. The Board has a formal meeting schedule with ad hoc meetings called as and when circumstances require. This includes an annual calendar of agenda items to ensure that all matters are given due consideration and are reviewed at the appropriate point in the

regulatory and financial cycle. The Board has established a number of Committees as shown in the table below, including the newly-established Board Integration Committee which is chaired by David Weymouth. The table also shows each Director's attendance at Board and Committee meetings they were eligible to attend in 2019.








Group Audit Committee

Group Remuneration Committee
Group Nomination
and Governance Committee

Group Risk Committee

Board Integration Committee
Sir Malcolm Williamson (Chairman) 1/11 n/a 1/11 1/11 n/a 3/31
David Weymouth (Deputy Chair) 13/13 n/a 7/7 5/5 n/a 3/3
Graham Allatt 12/13 7/7 n/a n/a 7/7 n/a
Eric Anstee 12/13 7/7 n/a n/a 7/7 n/a
Tim Brooke 1/11 2/21 n/a n/a 2/21 n/a
Rod Duke 13/13 n/a 7/7 5/5 n/a 3/3
Andy Golding 13/13 n/a n/a n/a n/a 3/3
Noël Harwerth 1/11 n/a 1/11 1/11 1/21 n/a
Margaret Hassall 13/13 5/53 n/a n/a 5/53 3/3
Sarah Hedger 12/122 2/22 n/a n/a n/a 3/32
Rajan Kapoor 1/11 2/21 1/11 n/a 2/21 3/31
Mary McNamara 12/13 n/a 7/7 4/43 5/53 n/a
April Talintyre 13/13 n/a n/a n/a 4/53 n/a
Ian Ward 1/11 n/a n/a n/a n/a n/a

1. Appointed as a Director on 4 October 2019.
2. Appointed as a Director on 1 February 2019.
3. Ceased to be a member on 4 October 2019.

All Directors are expected to attend all meetings of the Board, any Committees of which they are members and to devote sufficient time to the Company's affairs to fulfil their duties as Directors.
Where Directors are unable to attend a meeting, they are encouraged to submit any comments on the meeting materials in advance to the Chair, to ensure that their views are recorded and taken into account during the meeting.

The first combined Board meeting was held in Wolverhampton and provided an opportunity for Directors and Executives to meet with representatives from different parts of the business. Similarly, introductory meetings were held in Chatham.

Key Board activities during the year included:
- Strategy - the Board convened a number of meetings and update calls leading up to the Combination with CCFS
- Risk monitoring and review
- Governance and compliance
- External affairs and competitor analysis
- Talent review/succession planning
- Annual, interim and quarterly reporting
- Customer/brand/product review
- Policy review and update
- Investment proposals
- Mission, Vision and Values

Roles of the Chairman and Chief Executive Officer
The roles of Chairman and Chief Executive Officer (CEO) are distinct and held by different people. There is a clear division of responsibilities, which has been agreed by the Board and is formalised in a schedule of responsibilities for each.

The Chairman, David Weymouth, is responsible for setting the tone at the top and ensuring that the Board has the right mix of skills, experience and development so that it can focus on the key issues affecting the business and for leading the Board and ensuring it acts effectively. Andy Golding, as CEO, has overall responsibility for managing the Group and implementing the
strategies and policies agreed by the Board. A summary of the key areas of responsibility of the Chairman and CEO, and how these have been discharged during the year, are set out on page 104.

Chairman's responsibilities
Activities carried out in 2019
Chairing the Board and general meetings of the Company.
David Weymouth chaired 12 out of 13 Board meetings held in during 2019, as well as the 2019 AGM.
Sir Malcolm Williamson chaired one Board meeting following his appointment in October 2019. He retired from the Board on 4 February 2020.
Setting the Board agenda and ensuring that adequate time is available for discussion of all agenda items.
The Chairman liaised with the Company Secretary, set the annual calendar of Board business and the agendas for the individual meetings. Time is allocated for each item of business at meetings.
Promoting the highest standards of integrity, probity and corporate governance throughout the Company.
The Board received regular updates from its Committees on changes in corporate governance and its application to the Company.
Ensuring that the Board receives accurate, timely and clear information in advance of meetings.
The Chairman, in liaison with the Company Secretary and the CEO, agreed the information to be distributed to the Board in advance of each meeting.
Promoting a culture of openness and debate by facilitating the effective contribution of all NEDs.
Ensuring constructive relations between Executive and NEDs and the CEO in particular.
The Chairman ran meetings in an open and constructive way, encouraging contribution from all Directors and regularly met with the NEDs without management present so that any concerns could be expressed.
Regularly considering succession planning and the composition of the Board.
The Board received regular updates from the Group Nomination and Governance Committee. Details of the Committee's activities are explained in the Group Nomination and Governance Committee report on pages 109 to 111.
Ensuring training and development needs of
all Directors are met, and that all new Directors receive a full induction.
The Chairman, in liaison with the Company Secretary, has reviewed the Directors' training requirements. Details of induction and training held during the year are given on page 106.
Ensuring effective communication with shareholders and stakeholders.
The Chairman, along with the Board, and assisted by the CEO, CFO and Investor Relations team, agreed a programme of investor relations meetings. Details of meetings carried out during the year are shown on page 108.

Chief Executive Officer's responsibilities

Andy Golding's responsibilities as CEO are to ensure that the Company operates effectively at strategic, operational and administrative levels. He is responsible for all the Group's activities; he provides leadership and direction to encourage others to
effect strategies agreed by the Board; channels expertise, energy and enthusiasm; builds individual capabilities within the team; develops and encourages talent within the business; identifies commercial and business opportunities for the Group, building strengths in key areas; and is responsible for all commercial activities of the Group, liaising with regulatory authorities where appropriate. He is responsible for the quality and financial wellbeing of the Group, represents the Group to external organisations and builds awareness of the Group externally.
Following the Combination, Andy now has a specific focus on the delivery of integration objectives.

An experienced Group Executive team, comprising specialists in finance, banking, risk, legal and IT matters, assist the CEO in carrying out his responsibilities. The biographies for the Group Executive team are set out on pages 98 and 99.

Group Executive Committee

The CEO chairs the Group Executive Committee, whose members also include the Chief Financial Officer (CFO), Group Chief Operating Officer, Chief Risk Officers of OSB and CCFS, Group General Counsel and Company Secretary, Group Commercial Director, Group Chief Information Officer, Chief Information Officer, Group Chief Credit Officer, Group Managing Director for Mortgages; Group Managing Director for Savings and the Group Chief Internal Auditor. Members of the CCFS Executive team joined the Group Executive Committee following the Combination. The Group Executive Committee is supported by a number of Management Committees. The purpose of the Group Executive Committee
is to assist the CEO in the performance of his duties, including:

- The development and implementation of the strategic plan as approved by the Board.
- The development, implementation and oversight of a strong operating model that supports the strategic plan.
- The development and implementation of systems and controls to support the strategic plan.
- To review and oversee operational and financial performance.
- To prioritise and allocate the Group's resources in accordance with the strategic plan.
- To oversee the development of a high performing senior management team.
- To oversee the customer proposition and experience to ensure consistency with the Group's obligation to treat customers fairly.
- To oversee the appropriate protection and control of private and confidential data.
- To review and oversee the key and strategic business risks.
- To oversee how the Mission, Vision and Values are being embedded.

The Group Executive Committee's activities during the year included:

- Business review
- Capital and funding
- Human resources and succession planning
- Governance, control and risk environment, current and forward-looking
- Integration planning
- Monitoring target operating model progress
- Mission, Vision and Values

Senior Independent Director
Following the Combination, Noel Harwerth was appointed as the Senior Independent Director (SID), succeeding Rod Duke. The SID's role is to act as a sounding board for the Chairman and to support him in the delivery of his objectives. This includes ensuring that the views of all other Directors are communicated to, and given due consideration by, the Chairman. In addition, the SID is responsible for leading the annual appraisal of the Chairman's performance.

The SID is also available to shareholders should they wish to discuss concerns about the Company other than through the Chairman and CEO.

Company Secretary
The Company Secretary, Jason Elphick, plays a key role within the Company, advising on good governance and assisting the Board to discharge its responsibilities, acting with integrity and independence to protect the interests of the Company, its shareholders and employees. Jason advises the Company to ensure that it complies with all statutory and regulatory
requirements and he works closely with the Chairman, CEO and Chairs of the Committees of the Board so that Board procedures (including setting agendas and the timely distribution of papers) are complied with, and that there is a good communication flow between the Board, its Committees, senior management and NEDs. Jason also provides the Directors with advice and support, including facilitating induction programmes and training in conjunction with the Chairman.


Balance and independence
The effectiveness of the Board and its Committees in discharging their duties is essential for the success of the Company. In order to operate effectively, the Board and its Committees comprise
a balance of skills, experience, independence and knowledge to encourage constructive debate and challenge to the decision- making process.

The Board comprises eight NEDs, the Chairman and two Executive Directors. All of the NEDs, including the Chairman, have been determined by the Board to be independent in character and judgement and free from relationships or circumstances which may affect, or could appear to affect, the relevant individual's judgement. The independence of the NEDs is reviewed continuously, including a formal annual review. Any NED who does not meet the independence criteria will not stand for election or re-election at the AGM.

The size and composition of the Board is kept under review by the Group Nomination and Governance Committee and the Board to ensure an appropriate balance of skills and experience are represented. An external skills review was undertaken during 2019. The Board is satisfied that its current composition allows
it to operate effectively and that all Directors are able to bring specific insights and make valuable contributions to the Board, due to their varied commercial backgrounds. The NEDs provide constructive challenge to the Executives, and the Chairman ensures that the views of all Directors are taken into consideration in the Board's deliberations. The Directors' biographies can be found on pages 96 and 97.

Non-Executive Directors' terms of appointment

NEDs are appointed for terms of three years, subject to annual re-election by shareholders. The initial term may be renewed up to a maximum of three terms (nine years). The terms of appointment of the NEDs specify the amount of time they are expected to devote to the business, which is a minimum of two and half days per month, calculated based on the time required to prepare for and attend Board and Committee meetings, the
AGM, meetings with shareholders and training. Their commitment also extends to working such additional hours as may be required in exceptional circumstances.

NEDs are required to confirm annually that they continue to have sufficient time to devote to the role.

Appointment, retirement and re-election of Directors

The Board may appoint a Director, either to fill a vacancy or as an addition to the existing Board. All appointments are subject to a formal, rigorous and transparent procedure; succession is also considered. Appointments and succession planning are based
on merit and objective criteria and, within this context, promotes diversity of gender, social and ethnic backgrounds, cognitive and personal strengths. Any new Director must then retire at the next AGM and is put forward for election by the shareholders.
All other Directors are put forward for re-election annually. In addition to any power of removal conferred by the Companies Act, any Director may be removed by special resolution, before the expiration of his or her period of office and, subject to the Articles, another person who is willing to act as a Director may
be appointed by ordinary resolution in his or her place. Tim Brooke, Margaret Hassall and Ian Ward will not stand for election or re- election at the AGM and will cease to be Directors on 7 May 2020.

Conflicts of interest

The Company's Articles set out the policy for dealing with Directors' conflicts of interest and are in line with the Companies Act 2006. The Articles permit the Board to authorise conflicts and potential conflicts, as long as the potentially conflicted Director
is not counted in the quorum and does not vote on the resolution to authorise the conflict.

Directors are required to complete an annual confirmation including a fitness and propriety questionnaire, which requires declarations of external interests and potential conflicts. In addition, all Directors are required to declare their interests
in the business to be discussed at each Board and Committee meeting. The interests of new Directors are reviewed during the recruitment process and authorised, if appropriate, by the Board at the time of their appointment. The Group Nomination and Governance Committee also reviews conflicts of interest relating to Directors at least annually; periodic reviews are also undertaken as required. The Group has also adopted a Conflicts of Interest Policy, which includes a procedure for identifying potential conflicts of interest within the Group.

No Director had a material interest in any contract of significance in relation to the Group's business at any time during the year
or at the date of this report.

Directors' indemnities

The Articles provide, subject to the provisions of UK legislation, an indemnity for Directors and Officers of the Group in respect of liabilities they may incur in the discharge of their duties or in
the exercise of their powers, including any liabilities relating to the defence of any proceedings brought against them, which relate to anything done or omitted, or alleged to have been done or
omitted, by them as Officers or employees of the Group. Directors' and Officers' liability insurance cover is in place in respect of
all Directors.

Directors' powers

As set out in the Articles, the business of the Company is managed by the Board, which may exercise all the powers of the Company. In particular, save as otherwise provided in company law or in the Articles, the Directors may allot (with or without conferring a right of renunciation), grant options over, offer, or otherwise deal with or dispose of shares in the Company to such persons at such times and generally on such terms and conditions as they may determine. The Directors may at any time after the allotment of any share but before any person has been entered
in the Register as the holder, recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation upon and subject to such terms and conditions as the Directors may think fit to impose. Subject to the provisions of company law, the Company may purchase any of its own shares (including any redeemable shares).

Training and development

The Chairman ensures that all Directors receive a tailored induction on joining the Board, with the aim of providing a new Director with the information required to allow him or her to contribute to the running of the Group as soon as possible. The induction programme is facilitated and monitored by the Company Secretary to ensure that all information provided is fully understood by the new Director and that any queries are dealt with. Typically, the induction programme will include a
combination of key documents and face to face sessions covering the governance, regulatory and other arrangements of the Group. Since the Combination, all Directors have had meetings with specific areas of the business within the Group.

As senior managers, under the Senior Managers Regime operated by the PRA and FCA, all Directors have had to maintain the
skills, knowledge and expertise required to meet the demands of their positions of significant influence within the Bank. As part of the annual fitness and propriety assessment, Directors are required to complete a self-certification that they have undertaken sufficient training during the year to maintain their skills, knowledge and expertise and to make declarations as to their fitness and propriety. The Company Secretary supports the Directors to identify relevant internal and external courses to
ensure Directors are kept up to date with key regulatory changes, their responsibilities as senior managers and other matters impacting the business.

Information and support

The Company Secretary and the Chairman agree an annual calendar of matters to be discussed at each Board meeting to ensure that all key Board responsibilities are discharged over the year. Board agendas are then distributed with accompanying detailed papers to Directors in advance of each Board and Committee meeting. These include reports from Executive Directors and other members of senior management. All Directors have direct access to senior management should they require additional information on any of the items to be discussed. The Board and Group Audit Committee also receive further regular and specific reports to allow the monitoring of the adequacy
of the Group's systems and controls.

The information supplied to the Board and its Committees is kept under review and formally assessed on an annual basis as part of the Board evaluation exercise to ensure it is fit for purpose
and that it enables sound decision-making.

There is a formal procedure through which Directors may obtain independent professional advice at the Group's expense. The Directors also have access to the services of the Company Secretary as described on page 105.

Board evaluation

The Board undertakes an evaluation of its performance and that of its Committees and individual Directors annually. An externally-facilitated evaluation was conducted during 2019 by Independent Audit. The evaluation was conducted by face to face interviews. Independent Audit concluded that members of the Board brought a wide range of relevant skills, knowledge and experience. The report outlined that OSB and the Board
benefited from a very capable senior management team noting that the energetic, confident and committed CEO and CFO were universally well regarded and possessed the necessary skills to drive growth. The report noted that their relationship with the Board was one of mutual respect and openness. It further stated that the quality of reports had improved across most areas, giving the Board foundation for good discussions. It was felt that OSB was on a positive path and that the Board was well placed to perform its duties effectively.

Independent Audit made suggestions which may, collectively or in some combination, contribute to more discursive Board meetings, with adjustments being made to ways in which the Directors and senior management interact in order to benefit the Board. The Board was aware that the technology strategy
required ongoing attention in light of OSB's growth, as did culture in order to monitor how successfully it is being integrated and understood throughout the Group. Independent Audit was satisfied that no individual or group of Directors dominated
the discussions or had undue influence in the decision- making process.

Suggestion Action proposed
Explore ways in which NEDs can be increasingly equipped to provide more wide-ranging strategic challenge as the business grows. Chairman to review Board and individual NED challenge as part
of the regular Board effectiveness reviews. Actions to be considered if required.
Increase the opportunities for NEDs to interact with each other, with Executives and with counterparts from the combined entity. Informal catch-ups will be scheduled around some meetings.
Ensure that a skills matrix is in place (and adjusted following the Combination) for NEDs and Executives, with input from the Group Nomination and Governance Committee. Skills matrix developed by an external firm and presented to the Group Nomination and Governance Committee in December 2019.
Continue to monitor closely the implementation and integration of the new culture. A number of culture surveys were conducted during and after the Combination. This will continue as part of the broader post integration culture strategy review.
Consider dedicating additional time on Board meeting days to cover the extra workload of the combined Board. 50% extra time has been allocated to post Combination Board meetings. This will be monitored and adjusted as appropriate.

Chairman and secretary to monitor as part of the Board effectiveness monitoring post Combination.
Consider additional support for HR Department, such as appointing a remuneration specialist. To be considered by CEO and Group Nomination and Governance Committee post Combination as part of the operating model review.
Continue to monitor risk reporting to the Board, to ensure it gives  a clear and effective summary of the debate and encourages NEDs to focus on the overarching risk picture. The management information (‘MI’) relating to Risk has been reviewed and refined throughout 2019. Risk MI will also be benchmarked against industry standards.
The Group Nomination and Governance Committee could be
more proactive on succession, feeding back more detailed reports to the Board to fuel the creation of a skills matrix for NEDs, which acknowledges the value of the Board as a combined entity which can be stronger than the sum of its parts.
An external review was commissioned, which involved interaction with each Board member to create a detailed skills matrix of the existing Board. This report is scheduled for full Board discussion
in 2020. A new Board Effectiveness review will be commissioned in 2020 which will continue to work on this and review the effectiveness of the Board as a whole.


The Group has established procedures by which employees may, in confidence, raise concerns relating to possible improprieties
in matters of financial reporting, financial control or any other matter. The Whistleblowing Policy applies to all employees of the Group and is benchmarked against industry standards. The Group Audit Committee is responsible for monitoring the Group's whistleblowing arrangements and the Policy.

The Group is confident that the arrangements are effective, facilitate the proportionate and independent investigation of reported matters and allow appropriate follow-up action to be taken. Further details are provided on page 116.

Relations with shareholders

Dialogue with shareholders
The Group has a dedicated Investor Relations function which maintains regular, open and transparent dialogue with institutional investors and sell-side analysts. The team has access to the CEO and CFO who are available for meetings with shareholders and frequently attend industry conferences. Twice a year, post year end and half year results, the CEO and the CFO participate in roadshows meeting larger investors. In 2019, for OSB only, the Investor Relations team and management met
a total of 140 individual existing and potential investors.

The Board's primary contact with institutional shareholders and sell-side analysts is through the CEO and the CFO. The Board is also regularly presented with shareholders' feedback, analysts' recommendations and market views via Investor Relations updates, topics which are frequently on the Board agenda.

As a result of the Combination and becoming a Level 2 firm, the Group conducted a remuneration consultation of the Executive team in the year, meeting with the top ten shareholders. These meetings were attended by the then Chairman, Sir Malcolm Williamson and the re-appointed Chairman, David Weymouth providing an opportunity to discuss the proposed remuneration but also any other topics of interest to our investors.

Annual General Meeting

The AGM will be held at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY on 7 May 2020 at 11am. The Chairs of each of the Committees of the Board will be present to answer questions put to them by shareholders. The Annual Report and Accounts and Notice of the AGM will be sent to shareholders
at least 20 working days prior to the date of the meeting.

Shareholders are encouraged to participate in the AGM process, and all resolutions will be proposed and voted on at the meeting on an individual basis by shareholders or their proxies. Voting results will be announced and made available on the Company's website, www.osb.co.uk.

Shareholders may require the Directors to call a general meeting other than an AGM as provided by the Companies Act 2006.
Requests to call a general meeting may be made by members representing at least 5% of the paid-up capital of the Company as carries the right of voting at general meetings of the Company (excluding any paid-up capital held as treasury shares). A request must state the general nature of the business to be dealt with at the meeting and may include the text of a resolution that may properly be moved and is intended to be moved at the meeting. A request may be in hard copy form or in electronic form and must be authenticated by the person or persons making it.
A request may be made in writing to the Company Secretary to the registered office or by sending an email to company. secretariat@osb.co.uk. At any general meeting convened on such request, no business shall be transacted, except that stated by the requisition or proposed by the Board.

Group Nomination and Governance Committee Report
The Combination provided an opportunity for an extensive review of the balance of skills required on the Board.
Dear Shareholder,

I am pleased to present my first report to you as
Chair of the Group Nomination and Governance Committee.

Membership and meetings

The Committee met a total of five times during 2019.

The members of this Committee are myself as Chairman of the Board (David Weymouth), Noel Harwerth and Mary
McNamara. Prior to the Combination, Rod Duke served as Chair of the Committee and I would like to thank him for his service and contribution.

A number of items were considered by the Committee during 2019, including examination of the revised UK Corporate Governance Code against practices to ensure compliance at the earliest opportunity. The Bank's progress in terms of achieving the commitments set out in the Women in Finance Charter and various diversity initiatives were also reviewed. I am very pleased to announce that OSB achieved its three year target during 2019 of having 30% of senior roles in the Bank occupied by women by 2020. During 2019, CCFS also made progress towards its targets, and since the Combination the Committee has been reviewing and intends to shortly publish a new revised Group target for
the combined entity.

Further details on areas considered by the Committee are provided on pages 110 and 111.

David Weymouth
Chair of the Group Nomination and Governance Committee and Chairman of the Board
19 March 2020
Group Nomination and Governance Committee Report continued


The specific responsibilities and duties of the Committee are set out in its terms of reference which are available on our website, www.osb.co.uk.

Composition of the Board and its Committees

The Committee conducted a review of the composition of the Group Audit, Group Remuneration and Group Risk Committees and its own composition during 2019, carefully considering the skills of the existing members and looking at any skills gaps applicable to each Committee. Sarah Hedger was appointed as a NED on 1 February 2019 following an extensive search for
an individual whose skills it was felt would add additional value to the Board.

On combining with CCFS, a number of changes were made to the Board and Committee memberships. Sir Malcolm Williamson was appointed Chairman of the Board, with David Weymouth (the previous Chairman) assuming the role of Deputy Chair and
leading the newly-established Board Integration Committee with a clear focus on the delivery of cost synergies and other expected benefits of the Combination. As part of the Combination, Tim Brooke, Noel Harwerth, Rajan Kapoor and Ian Ward (previously NEDs of CCFS) were appointed to the Board, with Noel Harwerth assuming the role of the SID. In addition, Rajan Kapoor was appointed as Chair of the Group Audit Committee; Sir Malcolm Williamson was appointed as Chair of this Committee and has since retired; David Weymouth now Chairs this Committee.
Graham Allatt and Mary McNamara remained as Chairs to the Group Risk Committee and Group Remuneration Committee respectively. A Group Models and Ratings Committee was also established, with effect from January 2020, which Graham Allatt will Chair.

On 4 February 2020, Sir Malcolm Williamson retired as Chairman of the Board and David Weymouth resumed the role of Chairman. On the same date, Rod Duke resigned from the OSB Board and was appointed Chairman of the CCFSL Board; Eric Anstee also resigned. Tim Brooke, Margaret Hassall and Ian Ward will step down from the Board after the AGM. David Weymouth was not involved in discussions relating to his appointment as Chairman.

Succession planning

The Committee considered both Board and Executive level succession planning during 2019, including ways in which skills could be developed. The Combination provided an opportunity for a wholesale review of the balance of skills required on the Board. An external firm was engaged to assist with this process. The findings were then used to discuss the optimum composition of the Board. In 2019, there has been considerable focus in the Bank on establishing the new Group Executive Committee, drawing
on senior executives from both OSB and CCFS in doing so. That process is now complete, noting that whilst two banking licences are retained there will be a separate Chief Risk Officer for each of the regulated Banks. In 2019, the Committee refined its review of Executive skills, in particular with a detailed succession plan
established for each role, drawing upon a review of existing talent across both of the Banks.

The Committee also received updates on the performance of the wider employee population, including those participating in the Primary Talent Group.


Our Bank recognises and embraces the benefits of having a diverse Board and workforce, and sees diversity at Board level as an essential element in maintaining a competitive advantage. We believe that a truly diverse Board and workforce will include and make good use of differences in the skills, regional and industry experience, age, background, race, gender and other distinctions between people. The Board recognises for itself that diversity is the key to better decision-making and avoiding group think.

These differences are considered in determining the optimum composition of the Board and, where possible, will be balanced appropriately. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

The Committee regularly reviews diversity initiatives including its annual review of the Diversity and Inclusion Policy. The Board remains committed to the Women in Finance Charter and has introduced measurable objectives with the aim continuing to
be that 30% of senior management positions within the Group's UK population will be undertaken by female employees by the end of 2020. Currently, 15% of the Group Executive Committee and 45% of our Board are female, placing us in the top 12 of the FTSE 250 for gender diversity. 9% of the Board is from an ethnic minority. The Board recognises and embraces the benefits that diversity can bring to its Board and sees diversity and inclusion at Board level as an essential element in maintaining a competitive advantage. This will be reviewed again at the end of 2020, post significant integration activities.

Our Bank has also appointed a Diversity and Inclusion Champion, Jason Elphick, to promote a series of diversity initiatives such as our commitment to those with a disability, mental health in the workplace and unconscious bias training.

Further details relating to diversity and inclusion are set out
on page 81.

The Committee reviewed changes in the regulatory landscape, particularly the remit and composition of Committees following the Combination.

Activities during 2019
In last year's report the Committee identified eight key priorities.

A summary of actions taken and outcomes are set out in the table below.

Objective Action taken
Consider the approach to Board and Group Executive succession planning and the extent to which that planning incorporates a range of diversity criteria beyond gender diversity. The Combination with CCFS in 2019 meant the focus of this action was firstly to establish the new optimal Board and Group Executive team. An external review led to a series of recommendations to be actioned by the Committee and the Board regarding Board composition in 2020. In addition, the Committee reviewed the succession plans for the prior Executive team (before the Combination) during 2019 and will conduct an in-depth review of executive succession plans across both Banks during 2020.
Consider further training and development needs for Committee members. Training and development needs for Committee members were reviewed and training plans prepared for each Committee and broader Board members during 2019. This involved a combination of tailored internally provided training and attendance at externally provided training events.
Provide oversight of how the Mission, Vision and Values are being embedded. The Committee received regular updates on culture and engagement, reviewed and tested externally run surveys (the Sunday Times Best Companies to Work For and the Banking Standards Board surveys).
Corporate governance reform. The Committee receives regular updates on corporate governance changes in the industry, including the steps being taken by the Group to ensure compliance with any relevant changes.
Embedding diversity initiatives and reduction of the gender pay gap. The Bank has raised awareness of the various initiatives that have been put
in place to support diversity. Such initiatives relate to disabled facilities, mental health awareness workshops, the introduction of a Women’s Networking Forum and unconscious bias training. Regular updates are provided to the Committee on the progress of diversity initiatives.
External Board and Committee effectiveness. An externally-facilitated evaluation of the Board and its Committees was undertaken during 2019, with a positive result overall. The Committee also reviewed and monitored the action plan of suggested improvements. Further details are set out on page 107.
Oversee progress with the Group’s purpose and sustainability. The Committee reviewed the Environmental Policy and the actions being taken to enable the Bank to continue to operate sustainably.
Oversee development of the talent pipeline. Members of the Committee met with the Primary Talent Group (‘PTG’) to understand the level of support provided to them and what other support would be beneficial.  The Committee also received periodic reports of the activities undertaken by the PTG.

Priorities for 2020
The Committee's priorities for 2020 are:

- Ensuring that the composition and size of the Board and Board Committees remains appropriate post Combination.
- Overseeing the development of succession plans for Group Executive Committee members and key Board roles.
- Oversee the development of the revised Mission, Vision and Values for the combined Group, along with the strategy to embed them.
- Review and agree the new combined diversity initiatives and reduction of the gender pay gap.
- External Board and Committee effectiveness review.
- Oversee progress with the Group's combined purpose and sustainability initiatives.
- Oversee the development of the talent pipeline and its relationship to succession planning.
- Provide oversight of the newly-established employee forum, OneVoice.

Group Audit Committee Report

The Committee is responsible for monitoring and reviewing the Group's financial reports and disclosures.

Dear Shareholder,

I am pleased to present my first report of the Group Audit Committee for 2019, following my appointment as its Chair in October 2019. The Committee is responsible for monitoring and reviewing the Group's financial reports and disclosures, its accounting policies and practices and systems of internal controls, including internal financial controls. The Committee manages the relationship with the external auditors and
oversees the work of the Internal Audit function. During the year, the Committee has continued to focus on areas of significant judgement in the financial statements, including those relating to the Combination with CCFS, as set out in the report below.

Taken as a whole, the Committee has an appropriate balance of skills, including recent and relevant financial experience.
In addition to members, standing invitations to Committee meetings are extended to the Executive Directors, Chief Risk Officer, Chief Internal Auditor, Group Conduct and Compliance Director and the external audit partner; all of whom attend meetings as a matter of practice. Other non-members
may be invited to attend all or part of any meeting as and when appropriate.

The Company Secretary acts as Secretary to the Committee. The Group Chief Internal Auditor and the external auditor attended all meetings during the year and also met in private
with the Committee; they have also had regular contact with the previous Chair throughout the year, as well as myself following my appointment. I discuss and agree the agenda with the Chief Financial Officer and Group Chief Internal Auditor in advance of each meeting and receive a full briefing on the key agenda items.

Upon assuming the role of Chair, I also became the Group Whistleblowers' Champion. The Committee oversees the framework and its operational effectiveness and reports to the Board on such matters. I have specific responsibility for overseeing the integrity, effectiveness and independence of the Group's policies and procedures on whistleblowing.

Further details on the activities of the Committee during the year and how it discharged its responsibilities are provided in the Report below.

Rajan Kapoor
Chair of the Group Audit Committee
19 March 2020

Membership and meetings

The Committee met seven times during the year. The current members of the Committee are Rajan Kapoor as Chair, Graham Allatt, Tim Brooke and Sarah Hedger. Eric Anstee was Chair of the Committee until 4 October 2019 and a member until 4 February 2020 when he stepped down from the Board. Margaret Hassall ceased to be a member of the Committee on 4 October 2019. Tim Brooke will cease to be a member of the Committee on 7 May 2020. Rajan Kapoor served as Chair of the CCFS Audit Committee and has wide-ranging finance experience in the banking industry.


The primary role of the Committee is to assist the Board in overseeing the systems of internal control and external
financial reporting across the Group. The Committee's specific responsibilities are set out in its terms of reference, which are reviewed at least annually. These are available on the Company's website, www.osb.co.uk, and cover external and internal audit, financial reporting, compliance, whistleblowing, fraud and internal controls.

In addition, the Chair of the Group Audit Committee is available to meet with the Company's investors on request, in accordance with the Financial Reporting Council's (FRC) Stewardship Code.

Activities during 2019

The principal activities undertaken by the Committee during the year are described below.

Significant areas of judgement considered by the Committee

The following significant accounting judgements were considered by the Committee in relation to the interim and full year results of the Group. The Committee also focused on the classification of Loan book Expected Credit Losses

The Committee received and challenged reports from management prior to each reporting date, explaining the approach taken to provisioning and the resulting changes in provision levels during the period.

Post completion of the Combination with CCFS, the Committee reviewed and challenged management's proposals relating to the:

- IFRS 9 provision requirements for the purchase of originated credit impaired (POCI) assets in respect of CCFS as set as at the date of Combination.
- Stage 2 transfer criteria: management proposed the implementation of an aligned transfer criteria framework which incorporated both a quantitative approach, which assessed whether a significant increase in credit risk had been observed (i.e. change in probability of default level) from the point of origination, supplemented by a qualitative rules-based approach, using both internal and external credit bureau information.
- Stage 3 transfer criteria: CCFS implemented an aligned stage 3 logic within the reporting period.
- Macroeconomic scenarios and probability weightings: management proposed utilising a common set of macroeconomic scenarios across both businesses, coupled with aligned probability weightings. Post the UK General Election result, the Committee received reports from the Group's economic adviser and management proposing a revised set of probability weightings. The Committee revised the original management proposals on how probabilities attached to the scenarios had changed during the period and ultimately approved the final weightings utilised within the Group's impairment calculations. The Group continued to utilise four scenarios; an upside, base case and two further downside scenarios.

Loan book acquisition accounting and income recognition

integration costs including exceptional items. In its assessment,

the Committee considered and challenged reports from management, explaining each area of significant judgement and management's recommended approach. The Committee also received reports from the external auditor setting out their views on the accounting treatment and judgements underpinning the financial statements.

The Group did not acquire any loan portfolios (other than the loans acquired in the Combination) in 2019. However, it has acquired a number of portfolios in prior years. Acquired loan books are initially recognised at fair value. Significant judgement is required in calculating their effective interest rate (EIR), using cash flow models, which include assumptions on the likely macroeconomic environment, including House Price Index (HPI), unemployment levels and interest rates, as well as loan level
and portfolio attributes and history used to derive prepayment rates, the probability and timing of defaults and the amount of incurred losses. The EIRs on loan books purchased at significant discounts are particularly sensitive to the prepayment and default rates assumed, as the purchase discount is recognised over the expected life of the loan book through the EIR. New defaults
are modelled at zero loss (as losses will be recognised in profit and loss as impairment losses) and therefore have the same impact on EIR as prepayments. Incurred losses at acquisition are calculated using the Group's collective provision model. The Committee reviewed and challenged reports from management before each reporting date on the approach taken. Particular focus was given to loan books where performance varied from expectation. The Committee reviewed a comparison of actual cash flows to those assumed in the cash flow models by book to challenge management's assessment of the need to update cash flow projections and adjust carrying values accordingly.

Effective interest rate

A number of assumptions are made when calculating the effective interest rate for newly-originated loan assets. These include their expected lives, likely redemption profiles and the anticipated level of any early redemption charges (ERCs). Certain mortgage products offered by the Group include significant directly-attributable net fee income, in particular certain Buy-to- Let products, and/or those that transfer to a higher revert rate after an initial discount or fixed period. Judgement is used in assessing the expected rate of prepayment during the discounted or fixed period and during the period post rate reversion. The Group uses historical experience of customer behaviour in its assessment along with economic outlook and market conditions.


In 2018, OSB introduced a period spent on the higher reversion rate in the EIR for two year fixed products. This was expanded to include three and five year fixed mortgages in 2019, as additional behavioural trends emerged. The assumed period spent on
the revert rate was based on a careful consideration of past behavioural data and the potential impact of the economic and regulatory outlook. The Committee also reviewed and challenged other assumptions used in the EIR calculations, in particular, prepayment curves applied in the redemption profile. Prepayment curves for fixed rate mortgages were approved by the OSB Assets and Liabilities Committee prior to implementation.


The Committee received information on the prepayment curve change proposals and supporting analysis to enable them to independently challenge the approach and conclusions.

The Committee also received and reviewed sensitivity analysis for key assumptions. Based on this work, the Committee is satisfied that the approach taken and judgements made were reasonable.

Further details of the above significant areas of judgement can be found in note 3 to the financial statements.

Combination accounting

The Committee considered, reviewed and challenged the acquisition accounting for the Combination with CCFS. This included the purchase price allocation (PPA) incorporating fair valuation of acquired tangible assets and liabilities and the identification and valuation of intangible assets.

An established model already in place at CCFS was used to determine the fair value of the loan book and associated pipeline. The Committee received and challenged the sensitivity analysis presented by management and also considered prices achieved on structured asset sales in 2019 and 2020.

Management used an independent external expert for advice on PPA and the identification and valuation of intangibles. The Committee reviewed and challenged the approach taken and
key assumptions and judgements made together with sensitivity analysis. Based on this work, the Committee was satisfied that the approach taken and judgements made in respect of the Combination accounting and PPA were reasonable.

Hedged assets

The Committee was also updated on the results of management's regular reviews of the amortisation profile of fair value adjustments on hedged assets associated with cancelled swaps in OSB, against the roll-off of the underlying legacy back book of long-dated fixed rate mortgages. The Group accelerated the amortisation of fair value adjustments on hedged assets during the year, in line with the mortgage asset run-off, due to faster than expected prepayments.

Financial Reporting

The Committee's review of financial reporting during the year included the Annual Report and Accounts, the Interim Results, quarterly trading updates, analysts presentations and pillar
3 disclosures. As part of its review, the Committee assessed management's application of key accounting policies, significant accounting judgements and compliance with disclosure requirements to ensure that these were consistent and appropriate to satisfy the relevant requirements. In particular, the Committee considered carefully the presentation of results on both a statutory and pro forma basis to ensure transparency and consistency throughout.

Viability and Going Concern

The Committee considered the current position of the Group, along with principal and emerging risks and assessed the prospects of the Group before recommending to the Board the Group's long-term viability statement. The Committee also
undertook a review before recommending to the Board that the going concern basis should be adopted in preparing the annual and interim financial statements.

Financial Reporting Council review

The Committee reviewed comments received from the Financial Reporting Council (FRC) on the OSB 2018 Annual Report and Accounts and management's proposed responses. These included enhancing disclosures in the 2019 Annual Report and Accounts in respect of non-financial information and aligning ECL disclosures, where possible, with the recommendations made by the Taskforce on Disclosures about Expected Credit Losses.
The Committee notes that the review conducted by the FRC was based solely on the Group's published report and accounts and does not provide any assurance that the report and accounts are correct in all material respects.

Fair, balanced and understandable

The Committee considered, on behalf of the Board, whether the 2019 Annual Report and Accounts taken as a whole are fair, balanced and understandable, and whether the disclosures are appropriate. The Committee reviewed the Group's procedures around the preparation, review and challenge of the Annual

using a risk-based methodology, including input from senior management and the Committee. A written report is prepared following the conclusion of each Internal Audit engagement and distributed to the Committee and senior management.
Responsibility for ensuring appropriate corrective action is taken, lies with management. The Internal Audit function follows up on engagement findings and recommendations until remedial actions have been completed.

Internal Audit maintains a close relationship with the Group's external auditor, Deloitte LLP (Deloitte). The external auditor is informed of Internal Audit's activities and results. The Committee carries out an annual review of the effectiveness of the Internal Audit function. In 2019, this was facilitated by a survey completed by Committee members, certain executives and the external auditors who had interacted with the Internal Audit function during the year. Following the review, the Committee was satisfied that the Internal Audit function operated effectively during the year.

Systems of internal control and risk management

Report and the consistency of the narrative sections with the

financial statements and the use of alternative performance measures and associated disclosures.

Following its review, the Committee is satisfied that the Annual Report is fair, balanced and understandable, and provides the information necessary for shareholders and other stakeholders to assess the Group's position and performance, business model and strategy, and has advised the Board accordingly.

Pillar 3 disclosures
The Committee approved the Group's Pillar 3 regulatory disclosures for publication on the Group's website, following a review of the governance and control procedures around their preparation.

Internal Audit

The primary role of the Internal Audit function is to protect the assets, reputation and sustainability of the Group. It assists the Group in accomplishing its objectives by providing independent and objective assurance on the design and operating effectiveness of the Group's risk management, governance, control framework and processes.

The Group Chief Internal Auditor and her team are supported by a panel of co-source firms who provide expert resource, when requested, on specific internal audits. The co-source model has been applied to CCFS as at 1 January 2020. Prior to this date, CCFS outsourced its Internal Audit function to KPMG. KPMG now forms part of the co-source panel to ensure that the experience and knowledge gained from CCFS is retained within the Group.

The Internal Audit Charter, which formally defines Internal Audit's purpose, authority and responsibility, was benchmarked against the latest guidance published by the Institute of Internal Auditors (IIA) and approved by the Committee in November 2019. The Committee also approved the annual Internal Audit Plan, which was developed, based on a prioritisation of the audit universe

The Committee received regular reports from the Group Chief Internal Auditor during 2019, which included progress updates against the Internal Audit Plan, the results of audits undertaken and any outstanding audit action points. The Committee approved the annual review of the Compliance Risk Assessment and Assurance Plan and received regular reports from the Group's Compliance function. The Committee used the Internal Audit
and Compliance Reports for its assessment of the effectiveness of the Group's system of internal controls and risk management. The Committee also received a report on the effectiveness of the Group's system of controls from the CEO, which was based on
a self-assessment process completed by senior managers and executives in the Group.

The Committee received and reviewed reports from management on the status of the substantiation of balance sheet general ledger accounts prior to the reporting date. The systems of internal control and risk management have been in place for the year under review and up to the date of approval of the Annual Report and Accounts.

The Committee reviewed and approved a number of policies following their annual update, including: anti-bribery and corruption, data protection, data retention and record management, fraud, sanctions, whistleblowing and anti-money laundering and counter terrorist financing. The Committee received reports on fraud prevention arrangements, fraud incidents, whistleblowing and an annual report from the Group's Money Laundering Reporting Officer during the year. The Committee also received regular updates on data governance and controls as the Group continued to enhance its data governance arrangements in connection with its planned application for an Internal Ratings-Based (IRB) model for capital requirements.


The Committee is responsible for monitoring the Group's Whistleblowing Policy and arrangements. Where concerns have been raised, a detailed report is provided on the investigation, actions taken, lessons learnt and changes made as a result.
The Chair of the Committee has overall responsibility for whistleblowing arrangements with oversight from the Board. Training and periodic updates are provided to all employees who are encouraged to use the multiple channels available to raise any concern they have. No concerns were raised that required
a report to be made to the regulators.

External auditor

The Committee is responsible for overseeing the Group's relationship with its external auditor, Deloitte LLP (Deloitte). This includes the ongoing assessment of the auditor's independence and the effectiveness of the external audit process, the results of which inform the Committee's recommendation to the Board relating to the auditor's appointment (subject to shareholder approval) or otherwise.

Appointment and tenure

Deloitte was appointed as external auditor of the Group from 2019 following a competitive tender process, with Rob Topley as the lead audit partner. The Committee confirms that the Group has complied with the Statutory Audit Services for Large
Companies Market Investigation (mandatory use of competitive tender processes and Audit Committee Responsibilities) Order 2014, which requires FTSE 350 companies to put their statutory audit services out to tender no less frequently than every
ten years.

New EU legislation adopted by the UK in 2016 set a maximum audit tenure of 20 years and also requires a tender at least every ten years. The new legislation is effective for financial periods commencing on or after 17 June 2016. Against this backdrop, the Group put the external audit contract out for tender for the
2019 financial year. There are no restrictive contractual provisions limiting the Company's choice of auditor. The next external
audit tender is expected to be 2028 for the financial year 2029. A resolution to re-appoint Deloitte as auditors will be presented at the AGM.


The Committee assesses the effectiveness of the external audit function on an annual basis. In 2019, the review was facilitated through a survey completed by members of the Committee, certain Executive Directors and other key employees who had significant interaction with the external audit team during the year. The survey assessed the effectiveness of the lead partner and audit team, the audit approach and execution, the role of management in the audit process, communication, reporting and support to the Committee as well as the independence and objectivity of the external auditor. The assessment concluded that the external audit process was effective throughout 2019.

Non-audit services

The engagement of the external auditor to provide non- audit services to the Group could impact the assessment
of its independence and objectivity. The Group has therefore established a policy governing the use of the external auditor for non-audit services. The policy specifies prohibited and approved permitted services and sets the framework within which permitted non-audit services may be provided. Prohibited services comprise activities that are generally perceived to involve the auditor making judgements or decisions that are the responsibility of management.

The Group maintains active relationships with several other large firms and any decision to appoint the external auditor for non- audit services is taken in the context of its understanding of the Group, which can place it in a better position than other firms to undertake the work and includes an assessment of the cost- effectiveness and practicality of using an alternative firm.

The new EU statutory audit market reform legislation adopted in the UK also applies a cap on permissible non-audit services of 70% of the preceding three-year average of audit fees for UK incorporated Public Interest Entities (PIEs). This is applicable for financial periods commencing on or after 17 June 2019. The
changes in EU law have been directly implemented in the UK by amendments to the Companies Act. The changes will continue to apply despite the UK's exit from the EU. As a result of the Combination of OSB and CCFS, the new combined Group contains multiple PIEs. Furthermore, where there has been a recent change in auditor, as is the case for OSB, the application of the rules needs to be considered carefully for each PIE. For the OSB Group, the rules on capping non-audit services will apply for the first time in 2022 (based on the average audit fees for 2019, 2020
and 2021). For the CCFS Group, the rules will apply for the first time in 2020 (based on the average audit fees for 2017, 2018 and 2019).

The Committee pre-approved a number of permitted services in 2019, including interim profit verifications and the half year review. The Committee also pre-approved other permitted non- audit services subject to an overall threshold of 50% of the final cost of 2019 Group annual audit services. The Committee, post Combination, also reviewed and approved non-audit services provided to the CCFS Group. The Committee regularly reviews
a schedule of year to date non-audit services. All permitted engagements where the fee is expected to be less than £ 25,000 may be approved by the CFO; where the fee is expected to be above £ 25,000 but below £ 100,000 it must be approved by
the Chair of the Committee. Engagements over £ 100,000 are approved by the Committee.

The OSB and CCFS policies were aligned for 2020 and incorporate the revised FRC ethical standard and audit standards effective from March 2020. The policy incorporates a whitelist of permitted non-audit services for UK incorporated PIEs which primarily
relate to those services required by law and regulation and other assurance services associated with the annual audit or annual report and reporting accountant services.

The fees paid to the external auditor in respect of non-audit services during 2019 totalled £ 329,000, representing 16% of 2019

Group audit services of £ 2,115,000 (2018: £ 135,000 representing 17% of 2018 Group audit services of £ 814,000) and are detailed in the table below.

Fees payable to the Company's auditor for the audit of the Company's annual accounts include £ 540,000 in respect of the audit of the acquisition date balance sheet and acquisition
accounting. Fees payable to the Company's auditor for the audit of the accounts of subsidiaries includes £ 592,000 in relation to the CCFS year end audit and £ 65,000 in relation to the audit of Canterbury Finance No.1 plc. Audit-related assurance services include fees in respect of the interim review and profit verification and include services for CCFS, relating to profit verifications from the date of the Combination. Other assurance services include

Group Audit Committee - key responsibilities

Internal Control and Risk Management
- Review internal financial control systems to identify, assess and monitor financial risks and other internal control and risk management systems
- Review and approve systems and controls for the prevention of bribery and procedures for detecting fraud including conduct risk and related activities
- Review the adequacy and effectiveness of anti-money laundering systems and controls
- Review the adequacy and security of the Group's whistleblowing arrangements and procedures
Financial Reporting
- Monitor the integrity of the financial statements, including annual and interim reports, trading updates, Pillar 3 disclosures, and any other formal announcements relating to financial performance
- Provide challenge and oversight on the consistency, quality and appropriateness of significant accounting policies and on the methods used to account for significant or unusual transactions
- Ensure appropriate accounting standards, estimates and judgements have been followed, taking into account the view of the external auditor
- Recommend significant changes to accounting policy to the Board

other Combination-related work and agreed upon procedures in respect of securitisations (2018: review of data submitted to the Bank of England under the Term Funding Scheme and a review of the OSB India financial statements as required by Indian income tax rules).

The Committee is satisfied that Deloitte is independent. It took into account the non-audit services provided during the year, and confirmations given by Deloitte as to its continued independence at various stages in the year.


The Committee undertook training during the year, including making extensive use of the Audit Committee Institute and training programmes run by the major accountancy firms. The members
of the Committee attended seminars and update meetings held by the FRC. In addition, Committee members attended a number of in-house workshops on specific areas. Some members of the Committee also met with key staff during the year to increase their knowledge and understanding of the business.


The Committee formally considers its effectiveness annually.
In 2019, the assessment was facilitated using a survey completed by members of the Committee. The review concluded that
the Committee operated effectively throughout 2019 with no significant improvements required.
Internal Audit
- Monitor and assess the role and effectiveness of the Internal Audit function in the overall context of the risk management system and the work of compliance, finance and the external auditor
- Review and approve the annual internal audit plan and the internal audit charter to ensure alignment to the key risks of the business
External Audit
- Ensure that at least once every ten years, the audit services contract is put out to tender to enable the Committee
to compare the quality and effectiveness of the services provided by the incumbent auditor - Consider and recommend to the Board the appointment, re-appointment and removal of the external auditor and to put this to shareholders for approval at the AGM - Oversee the relationship with the external auditor to include assessing the external auditor's independence and objectivity taking into account relevant UK law, regulation, ethical guidance and other professional requirements, approving remuneration for both audit and non-audit services and approving terms of engagement
- Discuss and review factors that could affect audit quality with the external auditor and approve the annual audit plan
- Develop and recommend to the Board the Group's formal policy on the provision of non-audit services by the external auditor and assess whether there is a direct or material effect on the audited financial statements

Group Risk Committee Report

The Committee robustly challenged the Group's performance against the Board-approved risk appetite.

Dear Shareholder,

I am pleased to present the report of the Group Risk Committee.

The Group Risk Committee met seven times in 2019. Since the Combination in October 2019, the composition of the Committee has changed, with Eric Anstee, Margaret Hassall,
Mary McNamara and April Talintyre ceasing to be members. I would like to thank each of them for their contributions during their time spent on the Committee. Tim Brooke, Noel Harwerth and Rajan Kapoor have been appointed as members with effect from October 2019 and, along with myself (Graham Allatt) form the membership of the Committee. Tim Brooke will cease to be a member on 7 May 2020. Only members of the Committee are entitled to attend meetings; however, the Chairman of the Board has a standing invitation to the Committee, along with the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Risk Officers (CROs) and Group Chief Credit Officer (GCCO), unless the Chairman of the Committee informs any of them that they should not attend a particular meeting or discussion.

The Committee robustly challenged the Group's performance against the Board-approved risk appetite, ensuring appropriate and timely consideration was given to business, economic
and regulatory factors impacting the Group's risk profile. The Committee maintained oversight of the Group's Strategic Risk Management Framework (SRMF) to ensure that it remained fit for purpose to support the Groups strategic growth objectives.

The Committee assessed and recommended for approval by the Board, key regulatory submissions including the Internal Capital Adequacy Assessment Process (ICAAP), the Group Recovery Plan and the Internal Liquidity Adequacy Assessment Process (ILAAP). In discharging this responsibility, the Committee focused on risk quantification techniques, underlying assumptions and the resulting risk assessment.

The Committee retains oversight of the strategic risk-based initiatives, including the Internal Ratings-Based (IRB) programme, operational resilience and the data enhancement programme.

Further information on the role and activities of the Committee is provided in the following Report.

Graham Allatt
Chair of Group Risk Committee
19 March 2020


The primary objective of the Committee is to support the Board in discharging its risk oversight and governance responsibilities. In particular, the Committee enables the Board to:

- Set a clear tone from the top in relation to a risk-based culture which fosters individual and collective accountability for risk management.
- Continuously review, challenge and recommend enhancements to the Group's SRMF.
- Ensure adequacy of how the Group organises and resources its risk management and oversight functions across the first and second line.
- Actively assess performance against risk appetite and challenge management to ensure that the Board's strategic, business and regulatory objectives are not put at unacceptable levels of risk.

The Committee's specific responsibilities are set out in its terms of reference, which are available on the Company's website at www.osb.co.uk.

Activity during 2019

In 2019, with oversight from the Committee, the Group continued to enhance and further integrate its SRMF, which represents the overarching framework established to manage its risk profile
in line with the Board strategy and risk appetite. The detailed overview of the SRMF is provided in the Group's Pillar 3 disclosures.
The key areas of the Committee's focus during 2019 are outlined below.

Risk appetite

The Committee played an active role in shaping and assessing the design of the Group's risk appetite in the context of economic and business outlook and uncertainties, the strategic growth agenda of the Group and regulatory developments. Members of the Committee participated in a risk appetite workshop in which risk appetite statements, risk metrics and guiding limits and triggers were discussed and challenged prior to recommendation to the Board for approval. The Committee also ensured that
the proposed risk appetite was subject to appropriate alignment to the Group's strategic agenda, business plans and stress testing capabilities.

The Committee also reviewed the Group's position against risk appetite across all principal risks and escalated issues to the Board where appropriate.

IRB Programme

The Committee reviewed regular project updates including a detailed plan to merge the OSB and CCFS specific IRB projects which incorporated an approach to develop and implement enhanced model governance arrangements.

Credit risk

The Committee has monitored the performance of the Group loan book on aggregated and asset class sub-segment levels by assessing the key indicators of credit quality, security coverage (including flood risk), affordability and borrower risk profile. The Committee also assessed forward-looking credit risk indicators in the form of bureau data on customer credit scores, mover alerts and indebtedness, business and economic early warning indicators.

The Committee challenged and approved updates to policies including the Group Lending Policy, the Arrears, Repossessions and Forbearance Policies and the Loan Impairment Provisioning Policy. The Committee also exercised oversight over credit risk models and provided an appropriate level of challenge in relation to model construction and validation to ensure that the models are appropriate and robust. The Committee has also directed management on how to monitor model performance.

During 2019, the Committee oversaw plans for the alignment of IFRS 9 methodologies and approaches across OSB and CCFS.
The Committee also assessed and approved the Group's provision adequacy levels throughout the year.

Market risk and liquidity risk

Market risk and liquidity risk are continually monitored by the Group Assets and Liabilities Committee (ALCO) which reports to the Committee. The Committee reviewed ALCO's regular assessments of the UK macroeconomic environment and potential impacts on the Group's assets and liquidity.

The Committee undertook an extensive assessment of the ILAAP prior to submission to the Board for approval.
Key areas of Committee focus were in relation to scenarios, funding assumptions under stress and calibration of liquidity and funding risk appetites.

Solvency risk and ICAAP

The Committee was involved with the design and approval of appropriate macroeconomic scenarios to be used in the Group's ICAAP. The ICAAP demonstrates how the Group would manage its business and capital during adverse macroeconomic and idiosyncratic stresses. The Committee assessed the results of all the risk-based capital assessments and stress testing before finally recommending the full ICAAP document to the Board
for approval.

The Committee also reviewed and challenged the Group Capital Plan and monitored total capital and CET1 forecasts throughout the year, ensuring risks were understood and managed appropriately.

The Committee additionally started to consider moving towards a combined ICAAP for OSB and CCFS and sought external advice on the best approach to alignment.

Group Risk Committee Report continued

Operational risk

The Committee received reports on operational risks at each of its meetings. The reports covered risk incidents that had arisen to allow the Committee to assess management's response and remedial action proposed. The reports also covered key risk indicators (KRIs), which can be quantitative or qualitative and provided insights regarding changes in the Group's operational risk profile.

The Committee requested a detailed analysis of operational incidents occurring during the course of 2019 to further understand any causes and trends. The Committee was satisfied that the actions taken were appropriate and that the control
of operational incidents continued to improve.

A full programme of operational resilience testing was undertaken throughout the year, including a Board-level disaster recovery
test simulation which was externally-facilitated and constructive feedback was provided.

Compliance and regulatory risk

The Committee received reports covering compliance and financial crime KRIs, which can be quantitative or qualitative
and provide insights regarding changes in the Group's compliance and regulatory risk profile. The Committee also assessed and recommended enhancements to the compliance and financial crime risk appetite before recommending it for approval by
the Board.

Risk Management Framework integration

The Committee considered the Combination Integration Plan and harmonisation of the Risk Management Frameworks and functions of OSB and CCFS. An external firm assisted the Group with the creation of the Integration Plan which sets out the key components of the respective firms' frameworks. The scope of all components is broken down into three distinct groupings, namely; business as usual, regulatory requirements and risk projects and sets out a summary of workstreams and timelines to achieve harmonisation.

Other risk types

The Committee reviewed the Group profiles of conduct risk, reputational risk, climate change risk and business and strategic risk against their respective risk appetites.

Recovery Plan

The Recovery Plan process is designed to ensure that in a time of stress the Group has a credible recovery plan that can be implemented in a timely manner. The Committee reviewed and commented on the proposed set of recovery options within its plan.

Group Risk Committee - key responsibilities Risk appetite and assessment
- Advise the Board on overall risk appetite, tolerance and strategy
- Review risk assessment processes that inform the Board's decision-making
- Consider the Group's capability to identify and manage new risks
- Advise the Board on proposed strategic transactions, including acquisitions or disposals, ensuring risk aspects and implications for risk appetite and tolerance are considered
Risk monitoring and framework
- Review credit risk, interest rate risk, liquidity risk, market risk, compliance and regulatory risks, solvency risk, conduct risk, reputational risk and operational risk exposures by reference to risk appetite
- Challenge and endorse the SRMF
- Provide challenge and oversight to the ICAAP framework
- Monitor actual and forecast risk and regulatory capital positions
- Recommend changes to capital utilisation
- Provide challenge and oversight to the ILAAP framework
- Monitor the actual and forecast liquidity position
- Review reports on risk appetite thresholds, identify where a risk of a material breach of risk limits exists and ensure proposed actions are adequate
- Provide challenge and oversight to the Recovery Plan framework
CROs and risk governance structure
- Consider and approve the remit of the Risk function
- Recommend to the Board the appointment and removal of the CROs
- Review promptly all reports from the CROs
- Review and monitor management's responsiveness to the findings of the CROs
- Receive reports from the ALCO and the Risk Management Committees

Other Committees
Group Models and Ratings Committee
Following the Combination, the Group Models and Ratings Committee was established as a sub-committee of the Group Risk Committee in January 2020. The primary purpose of the Committee is to act as the designated Committee for the purpose of material aspects of the rating and estimation processes
(as articulated in Article 189 of the EU Capital Requirements Regulation) and provide assurance of the Group's models and ratings systems. The Committee is chaired by the Chair of the Group Risk Committee, Graham Allatt. Rajan Kapoor and April Talintyre are members of the Committee.

Board Integration Committee
The Board Integration Committee was established in October 2019, following the Combination with CCFS. The primary objective of the Committee is to oversee planning and execution of the integration of OSB and CCFS, including oversight of synergies realisation. David Weymouth has been appointed as Chair of the Committee, with Andy Golding, Margaret Hassall, Sarah Hedger and Rajan Kapoor as members. Rod Duke served as a member until he stepped down from the Board on 4 February 2020.
The Committee met three times during 2019.