Management is responsible for establishing
and maintaining adequate internal control
over the financial reporting of Santander
UK. Management assessed the
effectiveness of Santander UK’s internal
control over financial reporting at
31 December 2021 based on the criteria
established in the Internal Control –
Integrated Framework issued by the
Committee of Sponsoring Organisations of
the Treadway Commission (COSO) in May
2013.
As a registrant under the US Securities
Exchange Act of 1934, Santander UK plc’s
management is responsible for establishing
and maintaining an adequate system of
internal control over financial reporting in
order to ensure the accuracy and reliability
of Santander UK plc’s Financial Statements
and the Form 20-F submitted to the SEC.
In line with COSO and SEC requirements,
those controls recognised as Sarbanes-
Oxley applicable are subject to annual
testing and certification by management
including an attestation by the CEO and the
CFO that the controls are operating
effectively and that the internal control
over financial reporting can be relied on.
All Sarbanes-Oxley control weaknesses
identified are captured, assessed and
included within the year end assessment of
the reliability of the Internal Control
environment. These weaknesses are
reported on an ongoing basis to the Board
Audit Committee to ensure continuous
improvements to the control environment
are achieved.
Based on this assessment, management
concluded, as at31 December 2021, that
Santander UK’s internal control over
financial reporting was effective.
Disclosure controls and procedures over
financial reporting
Santander UK’s management has
evaluated, with the participation of its CEO
and CFO, the effectiveness of its disclosure
controls at 31 December 2021. There are
inherent limitations to the effectiveness of
any system of disclosure controls and
procedures, including the possibility of
human error, and the circumvention or
overriding of the controls and procedures.
Accordingly, even effective disclosure
controls and procedures can only provide
reasonable assurance of achieving their
control objectives.
Based upon this evaluation, the CEO and
the CFO have concluded that, at
31 December 2021 Santander UK’s
disclosure controls and procedures were
effective to provide reasonable assurance
that information required to be disclosed by
Santander UK in the reports that it files and
submits under the US Securities Exchange
Act of 1934 is recorded, processed,
summarised and reported within the time
periods specified in the applicable rules and
forms, and that it is accumulated and
communicated to Santander UK’s
management, including the CEO and CFO,
as appropriate, to allow timely decisions
regarding disclosure.
Changes in internal control over financial
reporting
The internal control environment over
financial reporting has been enhanced with
100% of key controls independently tested
for both design and operational
effectiveness within the period (in prior
periods independent testing has been
focused on the higher inherent risk areas).
Statements of Compliance
The UK Corporate Governance Code 2018
Santander UK has opted to comply with the
Code wherever applicable in order to
achieve best standards of corporate
governance.
The Code applied to the financial year
ended 31 December 2021. The Board
confirms that it applied the principles and
complied with those provisions of the Code
throughout the year, except as follows:
–Provision 11: The Company does not
comply with the requirement for at least
half the Board, excluding the Chair, to be
NEDs whom the Board considers to be
independent for the full year, but was
compliant for periods of the year when
Director appointments or resignations
altered the Board composition so at least
half of the Board were considered to be
independent NEDs. For details, see Board
membership in the Chair’s Report on
Corporate Governance.
–Provision 17: The Company does not
comply with the requirement for the
Board Nomination Committee
membership to comprise a majority of
INEDs, following the appointment of
Pamela Walkden on 1 October 2021.
Whilst Pamela Walkden is not an INED,
her credentials and experience were felt
to be invaluable to the Board Nomination
Committee. We have assessed the
implications and believe that the
approach we follow is appropriate for our
size and ownership structure. Pamela
Walkden replaced Bruce Carnegie-Brown
who was also a GNED.
–Provision 36: The Remuneration
Committee has not developed a policy for
post-employment shareholding
requirements. However, the structure of
variable pay for EDs and other senior
executives ensures that they acquire a
meaningful shareholding in Banco
Santander SA which is held over a period
of up to eight years and which extends for
a significant period post employment. For
details, see the Remuneration Policy
Report
–Provisions 40 and 41: When determining
executive remuneration policy and
practices, the Remuneration Committee
addresses the factors of clarity, simplicity,
risk, predictability, proportionality, and
alignment to culture, and in particular
how our policy and practices align to
Santander UK’s core values of Simple,
Personal and Fair. Due to commercial
sensitivity, whilst we have chosen to
provide details of our pay arrangements
beyond the requirements for an entity
with our ownership structure, we have
chosen not to provide all of the
disclosures required by Provision 41. The
details not provided relate to (1) the
extent to which discretion has been
applied to remuneration outcomes and
the reasons why and (2) a description,
with examples, of how the remuneration
committee has addressed the factors in
Provision 40 (specifically predictability as
we do not provide the range of possible
values of rewards to individual directors).
Specific engagement does not take place
with the workforce to explain how
executive remuneration aligns with wider
company pay policy. However, an
explanation is publicly available for
employees in the Directors’ Remuneration
Report and the RFB Committee Chair, who
also has the responsibility for the role of
the Santander UK plc Employee
Designated NED, holds a number of
online engagement events which
provides opportunities for employees to
share their views and ask questions on
this subject. Details of the structure of our
remuneration arrangements and key
considerations of the Committee in the
year are included in the Remuneration
Policy and Implementation Reports. The
Code is publicly available on the Financial
Reporting Council website at
www.frc.org.uk.
UK Finance Code for Financial Reporting
Disclosure
Santander UK’s financial statements for the
year ended 31 December 2021 have been
prepared in compliance with the principles
of the UK Finance Code for Financial
Reporting Disclosure.