Internal controls

The board has overall responsibility for maintaining the Group's system of internal control and for reviewing its effectiveness. To discharge this responsibility, the board has established frameworks for internal governance and risk management.

The Group's system of internal control plays a key role in the management of risks that may impact the fulfilment of its objectives. Internal control facilitates effective and efficient operations, the development of robust and reliable internal reporting and compliance with laws and regulations. This system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material misstatement or losses.

The system is regularly reviewed and complies with the Revised Guidance for Directors on the Combined Code (the Turnbull Guidance) published by the Financial Reporting Council in October 2005.

The audit committee, working closely with the risk committee, on behalf of the board, reviewed the effectiveness of the system of internal control in February 2011, covering all material controls, including financial, operational and compliance controls and risk management systems. The necessary actions have been or are being taken to remedy any significant failings and weaknesses identified from these reviews. The board confirms that there is an ongoing process for identifying, measuring, managing, monitoring and reporting the significant risks faced by the Group, which has been in place for 2010.

The principal features of the system of internal control and methods by which the board satisfies itself that this system operates effectively are set in the Annual Report and Accounts 2010.