This section sets out our corporate governance processes and the role they play in supporting the delivery of our strategy, including reports from the Chairman and each of the Board Committee Chairs.

Directors’ report

How we comply with The UK Corporate Governance Code 2016

Chairman’s introduction

Who we are

◾   Board of Directors

◾   Group Executive Committee

What we did in 2018

◾   Board report

◾   Board Audit Committee report

◾   Board Nominations Committee report

◾   Board Reputation Committee report

◾   Board Risk Committee report

How we comply

Other statutory information

People

Remuneration report

Barclays PLC 2018 Annual Report on Form 20-F    1

The UK Corporate Governance Code 2016 (The Code)

The Code is not a rigid set of rules. It consists of principles (main and supporting) and provisions. The Listing Rules require companies to apply the main principles and report to shareholders on how they have done so.

You can find our disclosures as follows:

Individual Directors may fall into one or more categories.

In relation to board experience based on the location of the headquarters/registered office of a company.

John McFarlane

Chairman

Appointed:

1 January 2015

Jes Staley

Group Chief

Executive

Appointed:

1 December 2015

Tushar Morzaria

Group Finance

Director

Appointed:

15 October 2013

Crawford Gillies

Senior Independent

Director

Appointed:

1 May 2014

Paul Compton

Group Chief

Operating Officer

Bob Hoyt

Group General

Counsel

Laura Padovani

Group Chief

Compliance Officer

Tristram Roberts

Group Human

Resources Director

Tim Throsby

Chief Executive

Officer, Barclays

International

Ashok Vaswani

Chief Executive

Officer, Barclays UK

C S Venkatakrishnan

Group Chief

Risk Officer

Committee allocation of time (%)

1 Control issues

2 Business control environment

3 Financial results

   (including IFRS 9)

4 Internal audit matters

5 External audit matters

6 Other (including litigation,

   governance and compliance)

*   The increased amount of time allocated to financial results in 2018 reflects the role of the Committee in monitoring the impact of the IFRS 9 Financial Instruments accounting standard and ensuring that such impact was clearly communicated to shareholders, including providing input on material disclosures.

†  The reduced amount of time allocated to internal audit matters in 2018 is reflective of the progress made by Barclays Internal Audit in addressing the Matters Requiring Attention identified by the Federal Reserve Bank of New York, the issues arising from the PRA’s horizontal review of the function, and the recommendations made by Deloitte following its independent review of Barclays Internal Audit in 2017.

Fair, balanced and

understandable

reporting

(including country-by- country reporting and Pillar 3 reporting)

Barclays is required to ensure that its external reporting is fair, balanced and understandable.

The Committee undertakes an assessment on behalf of the Board in order to provide the Board with assurance that it can make the statement required by The UK Corporate Governance Code 2016.

◾  Assessed through discussion with and challenge of management, including the Group Chief Executive and Group Finance Director, whether disclosures in the Annual Report and other financial reports were fair, balanced and understandable.

◾  Evaluated reports from Barclays PLC’s Disclosure Committee on its assessment of the content, accuracy and tone of the disclosures.

◾  Established through reports from management that there were no indications of fraud relating to financial reporting matters.

◾  Evaluated the outputs of Barclays’ internal control assessments and Sarbanes-Oxley s404 internal control process.

◾  Assessed disclosure controls and procedures.

◾  Confirmed that management had reported on and evidenced the basis on which representations to the external auditors were made.

Having evaluated all of the available information and the assurances provided by management, the Committee concluded that the processes underlying the preparation of Barclays’ published financial statements, including the 2018 Annual Report and financial statements, were appropriate in ensuring that those statements were fair, balanced and understandable.

In assessing Barclays’ financial results statements over the course of 2018, the Committee specifically addressed and provided input to management on the disclosure and presentation of:

◾  the impact of IFRS 9 on, among other things, Barclays’ CET1 ratio, credit risk disclosures in the Pillar 3 report and shareholders’ equity

◾  the Group Finance Director’s presentations to analysts

◾  the level of segmental reporting.

The Committee recommended to the Board that the 2018 Annual Report and financial statements are fair, balanced and understandable.

Impairment

(refer to Note 7 to the financial statements)

Barclays has implemented IFRS9 by developing models to calculate expected credit losses in a range of economic scenarios. The key areas of judgement include setting modelling assumptions, developing methodologies for the weighting of economic scenarios, establishing criteria to determine significant deterioration in credit quality and the application of management adjustments to the model output.

◾  Assessed impairment experience against forecast, and considered whether impairment provisions were appropriate.

◾  Evaluated the impact of IFRS 9 on impairment.

◾  Monitored the Barclays Group’s ECLs, model changes, scenario updates, post-model adjustments, and volatility.

◾  Monitored SOX compliance in relation to IFRS 9 controls and, specifically, the ECL calculation.

The Committee received a number of deep dive presentations from the Finance and Credit officers responsible for the IFRS 9 implementation.

The Committee considered in detail the key IFRS 9 assumptions relating to staging criteria and the weighting of economic scenarios.

The Committee reviewed model adjustments and scenario updates made by management to ensure that impairment allowances were set at appropriate and adequate levels. In particular, the Committee reviewed the basis of the adjustment of £150m made to reflect current economic uncertainty in the UK.

The Committee agreed that the provision levels for impairment were appropriate.

In light of the need for additional disclosures to be made in relation to IFRS 9, the Committee reviewed management’s ‘dry run’ of the year end IFRS 9 disclosures which focused on those disclosures that were either new or significantly impacted. The Committee also reviewed the final IFRS 9 disclosures which, whilst understandbly still evolving, the Committee believed gave a good explanation of the impacts.

Conduct provisions

(refer to Note 25 to the financial statements)

◾  Regularly analysed the judgements and estimates made with regard to Barclays’ provisioning for PPI claims, taking into account forecasts and assumptions made for PPI complaints and actual claims experience for Barclays and the industry as a whole, including the volume of invalid PPI claims.

◾  Debated the impact on the future range of provisions arising from (i) the August 2019 time-bar on claims, (ii) the PPI marketing campaigns, and (iii) the fee cap on the submission of PPI complaints by claims management companies.

◾  Evaluated the adequacy of the PPI provision, considering whether the total provision is within the modelled range of future outcomes, and whether the external auditor agreed with management’s analysis and approach.

◾  Monitored the position on provisions for alternative PPI (card protection and payment break plan insurance) and considered whether further provisions were required.

Throughout the year, the Committee and management continued to monitor closely any changes in customer or claims management companies’ behaviour in light of the FCA time-bar and marketing campaign, and the ongoing impact of the Plevin case. Having reviewed the key factors impacting the PPI provision, the PPI provision was increased in Q1 2018. Following this increase, the Committee agreed with management’s assessment that the current provision of £888m was appropriate. The Committee noted that this estimate remains subject to significant uncertainty, in particular regarding the level of valid customer claims that may be received in the period to August 2019. In this context, the Committee was satisfied that sensitivities to the key variables were appropriately disclosed.

Although a number of significant legacy litigation issues were resolved during 2018, Barclays is engaged in various legal, competition and regulatory matters. The extent of the impact on Barclays of these matters cannot always be predicted, but matters can give rise to provisioning for contingent and other liabilities depending on the relevant facts and circumstances. The level of provisioning is subject to management judgement on the basis of legal advice and is, therefore, an area of focus for the Committee.

◾  Evaluated advice on the status of current legal, competition and regulatory matters.

◾  Assessed management’s judgements and estimates of the levels of provisions to be taken and the adequacy of those provisions, based on available information and evidence.

◾  Considered the adequacy of disclosure, recognising that any decision to set provisions involves significant judgement.

Long-term viability

The Directors are required to make a statement in the Annual Report as to the long-term viability of Barclays. The Committee provides advice to the Board on the form and content of the statement, including the underlying assumptions.

◾  Evaluated at year end a report from management setting out the view of Barclays’ long-term viability based on Barclays’ MTP. The report covered forecasts for capital, liquidity and leverage, and included forecast performance against regulatory targets, outcomes of the stress test of the MTP and forecast capital and liquidity performance against stress hurdle rates, funding and liquidity forecasts as well as an assessment of global risk themes and the Barclays Group’s risk profile.

◾  Considered the viability statement in conjunction with Barclays’ risk statements and strategy/business model disclosures.

◾  Addressed feedback from investors, the FRC and other stakeholders on viability statements in general.

The Committee agreed that the appropriate timeframe for the viability statement continued to be three years.

Taking into account the assessment by the Risk Committee of stress testing results and risk appetite, the Committee agreed to recommend the viability statement to the Board for approval

Valuations

(refer to Notes 13 to 17 to the financial statements)

Barclays exercises judgement in the valuation and disclosure of financial instruments, derivative assets and certain portfolios, particularly where quoted market prices are not available.

◾  Evaluated reports from the Group Financial Controller.

◾  Monitored the valuation methods applied by management to significant valuation items, including the Barclays Group’s Education, Social, Housing and Local Authority portfolio and a valuation disparity with a third party in respect of a specific long dated derivative portfolio.

The Committee noted that there were no new significant valuation judgements during the year.

Tax

(refer to Note 9 to the financial statements)

Barclays is subject to taxation in a number of jurisdictions globally and makes judgements with regard to provisioning for tax at risk, and on the recognition and measurement of deferred tax assets.

◾  Evaluated the appropriateness of tax risk provisions to cover existing tax risk.

◾  Confirmed that the forecasts and assumptions supporting the recognition and valuation of deferred tax assets was in line with Barclays’ Medium Term Plan (MTP).

◾  Monitored the impact to Barclays of the US framework for tax legislation, which was enacted on 22 December 2017, including the Base Erosion Anti-abuse Tax (BEAT).

The Committee reviewed Barclays’ global tax risk and associated provisions for the full year and noted that gross tax risk increased slightly, and the level of tax provisions remained appropriate.

The Committee was pleased to note that the Barclays Group was not affected by BEAT in respect of 2018

Internal control

Read more about Barclays’ internal control and risk management processes on page 40.

The effectiveness of the overall control environment, including the status of any material control issues and the progress of specific remediation plans.

◾  Evaluated and tracked the status of the most material control issues identified by management through regular reports from the Chief Controls Officer, assessed against the Controls Maturity Model.

◾  Evaluated the status of specific material control issues (being data management, compliance, cyber, credit risk, model risk, resilience, technology and transaction operations) and tracked the progress of the associated remediation plans against agreed timeframes.

◾  Considered the second line of defence role in the oversight of operational risk controls, including financial controls over operational risk.

◾  Evaluated reports on the internal control environment from the external auditor.

◾  Evaluated quarterly updates on lessons learned from Critical risk events, which were tracked by the Chief Controls Office.

The Committee welcomed the ongoing transition to a “business as usual” environment following the significant volume of work that had been undertaken as part of the Barclays Internal Controls Enhancement Programme, supported by the RCSA process.

The Committee continued to use the output from the RCSA process in its review of the control environment, and welcomed the introduction of more granularity, which has provided greater visibility on controls requiring remediation and associated risks. The Committee, together with the Risk Committee, received a deep dive presentation on this enhanced process in the course of the year. The Committee also received deep dives on control hot spots, including operational resilience and third party fraud.

The Committee monitored the implementation of the Operational Risk and Control System (ORAC) and tracked the transition of all issue reporting into that system. In addition, the Committee continued to provide feedback on the reporting of material control issues.

Business control environment

The effectiveness of the control environment in each individual business, including the status of any material control issues and the progress of specific remediation plans.

◾  Assessed reports on individual businesses and functions on their control environment, questioned the heads of the relevant businesses or functions on control concerns and scrutinised any identified control failures and closely monitored the status of remediation plans or workstreams to enhance the respective control environments.

◾  Received updates directly from senior management, and scrutinised action plans, in relation to remediation plans following unsatisfactory audit findings.

◾  Received updates from management on the Designated Market Activities remediation plan, which addresses Barclays’ regulatory commitments to the Federal Reserve Bank of New York (the Fed) and other US and UK regulators in relation to sales and trading practices across the FX, Rates and other Markets related business areas.

The Committee received regular deep dive control environment presentations. These provided further detail of management’s assessment of the business unit control environment and key areas of focus, including key control hot spots for the businesses. The Committee also received a number of presentations from business heads following unsatisfactory audit reports. The Committee challenged the business regarding their role in identifying the control issues, and requested confirmation from management regarding the remediation programme as well as the timeframes and accountability for delivery of that plan.

The effectiveness of the control environment in the Chief Operating Office (COO) and the status and remediation of any material control issues.

◾  Scrutinised on a regular basis the COO control environment through deep dives and management updates, taking the opportunity to directly challenge and question functional leaders, including the Chief Operating Officer, on the progress of remediation plans.

The Committee was pleased to note continuing progress to address control issues in accordance with the agreed timescales.

Raising concerns

The adequacy of the Barclays Group’s arrangements to allow employees to raise concerns in confidence and anonymously without fear of retaliation, and the outcomes of any substantiated cases.

◾  Monitored enhancements to the whistleblowing programme following the independent review that was commissioned by the Board in 2017.

◾  Reviewed the examples of best practice in the FCA’s Review of Firms’ Whistleblowing Arrangements.

◾  Monitored whistleblowing metrics, including case load and case ageing.

◾  Monitored instances of retaliation reports, and whether any instances had been substantiated.

◾  Received a presentation from BIA following its audit of the Investigations and Whistleblowing team.

As Whistleblowing Champion, the Chair of the Committee presented his annual report on whistleblowing matters to the Board.

The Committee continued to encourage and support the provision of training to colleagues and managers on whistleblowing issues, and received their own whistleblowing training. The Committee was pleased to note that the volume of cases remains proportionate to Barclays’ size and footprint.

The Committee was also pleased to note that the recommendations arising from the independent review of the whistleblowing programme had been implemented in full, and had been subject to validation by the Global Compliance Assurance team. Following the enhancements made, the Committee considered that the whistleblowing programme generally met with best practice as identified by the FCA’s Review.

The Barclays PLC Environmental Social Governance Report 2018 includes further details regarding the Barclays Group’s whistleblowing procedures and controls.

Internal audit

The performance of BIA and delivery of the internal audit plan, including scope of work performed, the level of resources, and the methodology and coverage of the internal audit plan.

◾  Scrutinised and agreed internal audit plans, methodology and deliverables for 2018.

◾  Monitored BIA’s progress on delivery against the Matters Requiring Attention identified by the Fed, the issues arising from the PRA’s horizontal review of the function, and BIA’s response to feedback received as part of the independent external review commissioned by the Committee.

◾  Monitored delivery of the agreed audit plans, including assessing internal audit resources and hiring levels, and any impacts on the audit plan, and reviewing the reasons for the postponement of audits in greater depth.

◾  Debated audit risk appetite and issue validation.

◾  Tracked the levels of unsatisfactory audits, and monitored related remediation plans.

◾  Approved the appointment of the Chief Internal Auditor for Barclays Bank UK PLC and Barclays Bank PLC respectively.

◾  Discussed BIA’s assessment of the management control approach and control environment in Barclays Bank UK PLC, Barclays Bank PLC and the functions.

◾  Evaluated the outcomes from BIA’s annual self-assessment.

The Committee received semi-annual thematic control reports from BIA and a quarterly operational report during 2018.

The Committee observed that the issues arising from unsatisfactory audits indicated that there was still work to do in embedding the required level of control consciousness across the Barclays Group and ensuring that control exceptions were highlighted clearly in management reporting.

The Committee welcomed the progress made by BIA in addressing the Matters Requiring Attention identified by the Fed, the issues arising from the PRA’s horizontal review of the function, and the recommendations made as part of the independent external review.

The Committee confirmed that it was satisfied with the outcome of the self-assessment of BIA performance, which evidenced that the function generally conforms to the standards set by the Institute of Internal Auditors. It further confirmed that it felt able to rely on the work of BIA in discharging its own responsibilities.

External audit

The work and performance of KPMG.

◾  Met with key members of the KPMG audit team to discuss the 2018 audit plan and agree areas of focus.

◾  Assessed regular reports from KPMG on the progress of the 2018 audit and any material accounting and control issues identified.

◾  Discussed KPMG’s feedback on Barclays’ critical accounting estimates and judgements.

◾  Discussed KPMG’s draft report on certain control areas and the control environment ahead of the 2018 year end.

◾  Discussed the approach to KPMG’s annual report to the PRA which will be issued following completion of the 2018 audit.

◾  Considered the draft SOX control report and the draft audit opinion.

The Committee approved the audit plan and the main areas of focus. Separate audit partners were assigned to lead the audits of Barclays Bank UK PLC and Barclays Bank PLC and the scope of the audit was, therefore, necessarily revised to reflect a legal entity view.

Read more about the Committee’s role in assessing the performance, effectiveness and independence of the external auditor below. Further details of the Committee’s consideration of audit quality can be found in the ‘Governance in action’ section of this report on page 26.

The Committee, alongside the Board, is very alive to the benefits of diversity in order to avoid ‘group think’ and to ensure that the Board and senior management team more closely reflect the diversity of the communities they serve.

Dear Fellow Shareholders

2018 saw the establishment of our new corporate structure, and the embedding of the newly constituted Barclays Bank UK PLC and Barclays Bank PLC boards comprising distinct combinations of executive and non-executive directors. Throughout this period of change, the Committee continued to consider regularly the composition of, and succession plans for, the Barclays PLC Board in order to ensure the right balance of diversity, experience and skills to provide the strategic oversight needed to motivate colleagues and sustain our business over the long term. In this respect, we were pleased to appoint Mary Anne Citrino as a non-executive Director in July 2018, the Committee having followed its usual approach of engaging an executive search firm and conducting a rigorous search and selection process. You can find out more about Mary Anne’s background, experience and skills in her biography on page 6. We also look forward to welcoming Nigel Higgins, my successor, as Chairman with effect from the conclusion of the AGM on 2 May 2019. Nigel’s appointment marks the culmination of an intensive recruitment process led by a sub-committee of the Board chaired by our Senior Independent Director, Crawford Gillies, and is made with the full approval and support of the Nominations Committee. You can read more about Nigel’s recruitment and appointment in the ‘Governance in action’ section of the Board report on page 26.

On 19 March 2018, we announced various Board changes to reflect the post-ring-fencing structure:

◾  Sir Gerry Grimstone, who was Deputy Chairman and Senior Independent Director of Barclays PLC and Chair of the Barclays PLC Reputation Committee, moved instead to become Chairman of Barclays Bank PLC. He remains a non-executive Director of Barclays PLC

◾  Sir Ian Cheshire was appointed Chairman of Barclays Bank UK PLC. He remains a non-executive Director of Barclays PLC

◾  Crawford Gillies was appointed Senior Independent Director of Barclays PLC

◾  Mary Francis was appointed Chair of the Barclays PLC Reputation Committee

Continuing on the theme of succession, one of the Committee’s key considerations is the

processes for executive succession. During the year, we closely monitored the status and progress of the Barclays Talent and Succession strategy - which is aimed at attracting and retaining the best talent for the Barclays Group - and provided management with guidance and input on the strategy, as appropriate. The Committee also reviewed diversity in the talent pipeline and discussed ways in which high performing individuals within senior management can be developed and nurtured in order to strengthen our succession pipeline.

The Committee was encouraged by Barclays’ ever increasing commitment to diversity. The Committee, alongside the Board, is very alive to the benefits of diversity at board level and in senior management, both in terms of gender, ethnicity and more broadly, in order to avoid “group think” and to ensure that the Board and the senior management team more closely reflect the diversity of the communities that they serve. In light of the Hampton Alexander and Parker Reviews, the Board Diversity Policy and Committee terms of reference were reviewed in order to ensure that both documents reflect our commitment to identifying, attracting, retaining and promoting the best talent, irrespective of the gender, ethnic background, religion or other defining characteristic of any candidate. The Board Diversity Policy and the Committee’s terms of reference are available at home.barclays/corporategovernance.

In July 2016, Barclays was proud to become one of the first signatories to HM Treasury’s Women in Finance Charter and remains committed to its pledge to improve gender diversity within the financial services sector. Work has continued towards our target of 33% female representation on the Board by 2020, not least, with the appointment of Mary Anne Citrino as a non-executive Director to the Board. The Committee also reviewed the Barclays Group’s progress towards building a diverse and inclusive workforce, including reviewing updates on progress made across the Barclays Group against the five global pillars of Barclays Diversity and Inclusion strategy: gender, disability, LGBT, multicultural and multigenerational. Find out more about this in the People section on pages 47 to 52.

Committee performance

The performance of the Committee was assessed by Independent Board Evaluation, an independent, external corporate governance consultancy as part of the annual effectiveness review. The results confirm that the Committee is performing effectively, and that the role and responsibilities of the Committee are clear and well understood. Last year’s review noted that the Committee needed to be mindful of ensuring that all non-executive Directors received the same flow of information in relation to decisions and discussions by the Committee. The Committee sought to address this through the delivery of updates by me, as Chair of the Nominations Committee, to the Board and outside of scheduled Board meetings, to the extent appropriate. This year’s review notes that this is something that now needs to be further built upon. More information on the 2018 review of Board, Board Committee and individual Director effectiveness, and progress made against the findings of the 2017 review, can be found on page 25 and 26.

Looking ahead

Whilst it is always a difficult choice to retire from a company as prestigious as Barclays, I am delighted that the Board has appointed Nigel Higgins to succeed me as Chairman. I have every confidence that Nigel will be a superb steward of both the Board and the bank as Barclays continues to progress following the substantial restructuring of the past few years.

John McFarlane

Chair, Board Nominations Committee

20 February 2019

The significant matters addressed by the Committee during 2018 are described on the following pages.

Board and Board Committee composition

The membership of the Board, and the current and future composition of the Board and its Committees.

◾  Reviewed the Board skills matrix and discussed the key skills and experience needed on the Board in the context of future strategic direction and structural reform, including any areas requiring strengthening from a skills and succession perspective.

◾  Identified the requirement for additional non-executive Directors with attributes including investment banking experience, retail banking experience and also digital / technology experience.

◾  Continued the search for an additional female non-executive Director with the relevant skill set.

◾  Played an important role in the search for the Chairman’s successor.

◾  Reviewed the membership, size and composition of the Board Committees.

The Committee prepared an appropriate individual specification for an additional non-executive Director and shared it with executive search firm, Egon Zehnder. Egon Zehnder was advised that, subject always to applying rigorous, objective criteria, in the context of Barclays’ strategic direction and the diversity of gender, social and ethnic backgrounds, cognitive and personal strengths, there was a preference for female candidates in light of the Board’s diversity target of having 33% female representation on the Board by 2020. Egon Zehnder prepared a long-list of candidates (including references and CVs), which was reviewed by the Committee. A shortlist was prepared, and the candidates were interviewed. Mary Anne Citrino was identified as the preferred candidate, and was appointed to the Board on 25 July 2018.

The Committee continues its search for an additional female non-executive Director – preferably with retail banking experience and digital/technology experience – to further promote diversity of gender on the Board. Any appointment made will be based on merit and, as mentioned above, objective criteria.

Board composition of Barclays Bank UK PLC and Barclays Bank PLC in preparation for the legal entity stand up on 1 April 2018 under the Structural Reform Programme

The composition of the Barclays Bank UK PLC and Barclays Bank PLC boards.

◾  Finalised the establishment of the boards of Barclays Bank UK PLC and Barclays Bank PLC, and discussed the suitability of potential candidates identified to join those boards.

The Committee finalised the appointments to the boards of Barclays Bank UK PLC and Barclays Bank PLC ahead of the execution of structural reform. This included the appointment of Chairs to these Boards in Sir Ian Cheshire and Sir Gerry Grimstone respectively, and taking the opportunity to appoint a dedicated Senior Independent Director within Barclays PLC in Crawford Gillies.

◾  Reviewed the progress being made against Barclays’ Talent and Succession strategy, including monitoring diversity within the talent pipeline.

◾  Discussed updates from the Group HR Director on the Barclays Group Executive Committee succession plans, including assessing emergency cover, the existing talent pipeline and any potential gaps.

◾  Considered individuals identified as potential Barclays Group Executive Committee successors and discussed next steps for their development.

◾  Assessed the succession plans for the most critical business unit and functional roles, and discussed how to develop the high performing individuals identified.

The Committee reviewed the succession pipeline of the Barclays Group Executive Committee and their direct reports. The Committee was encouraged that all Barclays Group Executive Committee roles had at least one female successor, and that 33% of the total successors identified were female. Barclays is committed to achieving 33% female representation among the Barclays Group Executive Committee and their direct reports by 2020, and as at year-end 2018 we are reporting 28% female representation among this population.

The Committee also discussed the continued use of ex officio posts to both the Barclays Group Executive Committee and business executive committees to give senior individuals more exposure to Barclays Group matters. This serves to not only broaden the scope of perspectives within the relevant committee but also to develop those individuals thus ensuring a healthy pool of potential candidates in the succession pipeline.

◾  Reviewed the Barclays Group’s progress towards continuing to build a diverse and inclusive workforce.

The Committee received regular updates from the Global Head of Diversity and Inclusion on progress made across the firm against the five global pillars of Barclays Diversity and Inclusion strategy: Gender, Disability, LGBT, Multicultural and Multigenerational. Whilst acknowledging that there is more to do, the Committee was pleased with the progress that had been made.

Further detail on this progress can be found above under “Board and Board Committee Composition” and in the People section on pages 47 to 52.

Conduct risk

Conducting robust reviews of any current and emerging risks arising from the inappropriate provision of financial services

◾  Discussed updates from management on conduct risk and considered performance against key conduct risk indicators, and the status of initiatives in place to address those risks and further strengthen the culture of the business.

◾  Requested and considered deep dive analyses on conduct risk, including on progress in developing intelligence- led initiatives to combat fraud.

◾  Received reports on internal audit activities relating to conduct, including details of any unsatisfactory audit reports and remediation steps identified.

◾  Received updates on the implementation of the revised Code of Conduct, The Barclays Way.

◾  Reviewed the Compliance function’s annual compliance plan.

Management was engaged in thorough discussion and challenge on the conduct risk dashboard, and alignment with the Culture Dashboard.

The Committee was particularly pleased with the level of conduct risk insight received from the use of data analytic tools and from the deep dive sessions.

The Committee benefited from the presentation of material conduct structured scenario assessments, described in the ‘Governance in action’ section of this report on page 30.

The Committee challenged management to align analysis and control of conduct risk with that of other Principal Risks, such as Market and Credit Risk, and approved the revised Conduct Risk Management Framework and the 2019 Annual Compliance Plan.

Area of focus

Cultural progress

Reviewing management’s progress in embedding a values-based culture across the organisation

◾  Debated Culture dashboards and the progress being made to embed cultural change across Barclays globally.

◾  Received regular updates on colleague engagement metrics and the results of employee Your View surveys.

◾  Received reports on internal audit activities relating to culture.

◾  Considered and discussed with representatives of the Banking Standards Board the results of their 2017 and 2018 Annual Reviews of Barclays and received periodic updates from management detailing follow up against the 2017 key findings.

◾  Received information on management’s initiatives to improve colleague well-being and resilience, including actively encouraging employees to work dynamically and bolstering the supportive environment in which colleagues feel able to talk about the impacts of stress and mental health concerns.

Following the Committee’s challenge to improve the use of the Culture Dashboard, it was satisfied with management’s progress to evolve and align the culture dashboards with the conduct dashboards

Through consideration of the Your View results in each quarter, the Committee was encouraged by the high colleague engagement scores achieved throughout 2018 and especially in response to launch of the new Purpose, and by improvements made to the perception of colleagues’ working environments, and in reducing bureaucracy. The Committee appreciated management’s acknowledgement that further improvement is still required in these areas and of the need to continue to embed and instil the desired culture Group-wide, and was supportive of the work undertaken by the Group Chief Executive to continue to drive the desired culture across the Barclays Group.

The Committee regularly discussed the importance of an open and honest culture in which colleagues feel able to speak up and raise concerns.

Reputation and brand

Ensuring that Reputation risks and issues are identified and managed appropriately.

◾  Reviewed at each meeting key significant and emerging Reputation risks facing Barclays, receiving specific information on business action to address those issues and the outcomes of horizon scanning.

◾  Regularly evaluated the measures being taken to understand external perceptions of the Bank, including 2018 YouGov Reputation Research.

◾  Considered whether the process for identifying, managing and overseeing reputation risk was functioning effectively.

◾  Reviewed the refreshed Reputation Risk Management Framework.

The Committee achieved greater oversight from enhanced Reputation risk reports, and minutes of meetings of Risk Committees of major subsidiaries.

The Committee held significant discussion on and challenged management to, enhance the Reputation Risk framework to better align it to other Principal Risks Frameworks, and approved the refreshed Reputation Risk Management Framework.

Customer satisfaction

Ensuring fair outcomes for customers by monitoring complaints volumes, the standard and quality of complaints handling processes, root cause analysis of complaints, and other relevant metrics.

◾  Received bi-annual updates on complaints and challenged the performance against key indicators.

◾  Considered the quality of the processes in place to address and resolve customer complaints.

◾  Monitored trends in the underlying causes of complaints and considered forward looking analysis to identify events (both industry-wide and Barclays-specific) which could influence the volume and timings of complaints.