LPC Governance Guide


 

LPC GOVERNANCE GUIDE

 

Download link: LPC governance guide

 

Introduction

Local Pharmaceutical Committees (LPCs) are bodies recognised under NHS legislation with a duty to represent the NHS pharmacy contractors in the LPC area.  The LPC is funded by the contractors it represents and is accountable to those contractors for the work that it does on their behalf and for the effective and economical use of LPC funds. High standards of corporate and personal conduct are a requirement for the LPC and its members and all aspects of the LPC’s operations must be open to critical scrutiny.

 

To achieve these standards, rules and procedures need to be in place and that is what good governance is about: making sure the LPC is acting transparently, honestly and not in the self-interest of its members. This is important if the LPC is to have credibility with others: much of the LPCs external dealings are with Primary Care Organisations and Local Authorities which themselves have stringent requirements for good governance and will expect sound governance arrangements in the organisations they work with – such as LPCs.

 

It is good practice for LPCs to advise the Area Team (AT) of the LPCs governance arrangements – being seen to have good governance is as important as having the arrangements in place.

 

Principles of good governance

 

Corporate governance has been defined by the Audit Commission as:

 

The system by which an organisation is directed and controlled to achieve its objectives and meet the necessary standards of accountability and probity’.

 

There is now an agreed and accepted set of principles for the foundation of a system of good governance and these are normally referred to as the Nolan principles. These principles were developed by Lord Nolan who, in 1995, chaired the Committee on Standards in Public Life.  It was subsequently recommended that these principles should be incorporated into the codes of conduct of all public bodies.

 

CODE OF CONDUCT (If agreed by the committee)

 

The Officers and Members of Merton, Sutton and Wandsworth (MSW) Local Pharmaceutical Committee (LPC) are expected to observe the highest standards of impartiality, integrity and objectivity in the performance of the duties of the Local Pharmaceutical Committee both at meetings of the committee and when representing the committee and agree to be bound by the key principles of Good Governance listed below.

 

  1. Selflessness

The members of the Committee have a general duty to act in the best interests of the Community Pharmacies in Merton, Sutton, and Wandsworth as a whole. They should not do so to gain financial or other material benefits for themselves or their friends.

 

  1. Integrity

The members of the LPC Committee:

  • should not place themselves under any financial or other obligation to outside individuals or organisations that might seek to influence them in the performance of their role
  • should, as well as avoiding actual impropriety, avoid any appearance of improper behaviour
  • should avoid accepting gifts and hospitality that might reasonably be thought to influence their judgement

 

  1. Objectivity

In carrying out their role, including deciding on LPC Committee appointments, awarding contracts, or transacting other business, members of the LPC Committee should ensure that decisions are made solely on merit.

 

  1. Accountability

The members of the Committee:

  • are accountable for their decisions and actions to the Contractors in MSW and must submit themselves to scrutiny as appropriate to their role

 

  1. Openness

The members of the Committee:

  • should ensure that confidential material, including that about individuals, is handled with due care
  • should be as open as possible about their decisions and the actions they take and give reasons for their decisions; and restrict access to information only when the wider interest clearly demands

 

 

  1. Honesty

The members of the LPC Committee:

  • have a duty to declare any interests relating to their Committee role and to take steps to resolve any conflicts that may arise
  • must resolve any conflict between his/her private interests and his/her LPC Committee duties in favour of the LPC Committee role
  • must make relevant declarations of interest in their different roles both within and outside the LPC

 

  1. Leadership

The members of the LPC Committee:

  • should promote and support good governance by leadership and example
  • must always be respectful to fellow members

 

  1. Confidentiality

 

The members of the LPC Committee:

  • promote and support the principle of open and transparent decision- making, and will be happy to talk about any aspect of the LPC operation
  • shall respect the LPCs need for confidentiality if it arises and will not share details of sensitive discussions outside LPC Committee meetings

 

  1. Conduct and behaviour

The members of the LPC Committee:

  • must respect the ideas and input of fellow LPC Committee members
  • challenge fellow LPC Committee members’ views and statements in a constructive, polite, and informed manner – challenge the idea, not the person
  • seek to influence decision-making within formal meetings, and not try to force the process by arranging improper pressure either from within the committee or through external means

 

If members of the LPC Committee feel that:

  • a member’s behaviour at meetings is unacceptable, or
  • the member is bringing the organisation into disrepute through actions or statements made outside meetings, or
  • the member is disrupting or subverting democratic decision-making processes.

 

the member may be asked to leave the Committee following investigations conducted by the governance committee.

 

Responsibilities as a committee member

 

Below is a list of responsibilities each board member is required to fulfil.

Each member of the LPC Committee:

 

  • must play a full and active role in the work of the committee and should fulfil their duties and responsibilities responsibly and, always, act in good faith and in the best interests of the LPC.

 

  • must promote an inclusive and diverse culture within the LPC, and their actions should help create an environment where different perspectives and backgrounds are encouraged and valued.

 

  •  must not harass, bully, or act inappropriately towards or discriminate towards others. Such behaviour is not consistent with what is expected of a board member and will not be tolerated.

 

  •  must respect the principle of collective decision-making and corporate responsibility. This means that, once the board has decided, each member must support that decision.

 

Raising concerns

 

Each member should ensure that the LPC has an open, transparent, and safe working environment where members feel able to speak up and raise concerns.

 

  • If a member has a concern about a possible breach of this code, or a concern about misconduct or wrongdoing in any other area, then each member has a responsibility to raise this internally with the governance committee.

 

 

 

Signed: ______________________________ Date: ______________

 

 

Print Name: _________________________

 

 

 

 

 

It is good practice to put these principles on the agenda for an LPC meeting and to seek members’ approval which should be clearly minuted. The date of acceptance can then be entered at the top of the document which can accompany all future meeting papers. It would be good practice to send a copy of this document to the AT and post it on the LPC website. New members will be deemed to accept the principles, but it would be good practice to ask new members to sign a copy to declare this.

 

Governance and the LPC Constitution

 

The LPC Constitution is a key document setting out the membership of the committee and the constitutional rules under which it operates. It needs to be approved by contractors and the AT from which the LPC is seeking recognition. Adherence to the constitution is a fundamental governance requirement and the constitution should be read and understood by all members and officers.

 

The model LPC constitution provided by PSNC incorporates governance requirements binding the committee to good governance as a constitutional requirement. LPC members should study their constitution and pay attention to the governance provisions

 

Most LPCs adopt the model constitution – some LPCs adopt variations on the model. Any changes to the constitution must be made in accordance with the terms of the constitution. An important point about the constitution is that it sets out the powers of the LPC and LPCs can only act within the powers that the constitution provides. An LPC must not go beyond its powers. So, for example, there is no power to use LPC funds other than for administrative expenses.

 

The constitution also gives explicit duties that bind the LPC such as the need to hold an AGM and provide services to contractors.

 

So before taking any non-routine action LPCs should satisfy themselves that the committee has the power in the constitution to act in such a way; conversely the constitution should be examined to make sure the LPC is discharging properly the duties required under the constitution.

 

Governance in practice

 

Declarations of Interest

 

As part of transparency and accountability, LPC members should complete a Declaration of Interests specifying sources of remuneration, names of companies or other bodies in which the member has an interest and other sources of interest or pecuniary support which are relevant, or which may be relevant to membership of the LPC.

 

A model Declaration of Interests form is attached in Appendix 2.

 

The portfolio of Declarations of Interests should be openly available for inspection at LPC meetings.  The Declarations of Interests should also be available to contractors on request.

 

Declarations of Interests should be regularly reviewed and updated on an on-going basis. It is good practice to provide blank copies of the Declaration of Interests forms with the agenda for each meeting so that members can easily update their declaration when their circumstances change.

 

 Conflict of Interest

 

There may be instances where an LPC member has a conflict of interest, for example, consideration of a contract application in which the member is personally involved.  In such cases, there is a duty upon members to advise the Chairman of a possible conflict of interest.  The Chairman is then required to deal with the conflict.  Courses of action can range from simply prohibiting the member the right to vote on the issue, to not allowing the member to take part in any discussion or asking the member to withdraw from the meeting whilst that matter is under consideration.

 

Clearly, members should not attempt to influence other members through canvassing or other activity prior to the meeting.

 

Confidentiality

 

LPC members and LPC Secretaries will, during their work, produce or acquire commercially sensitive or otherwise confidential information.

 

Sometimes there is an apparent conflict between confidentiality and openness.  Whilst LPCs should be open and transparent about the conduct of the Committee and its Members, some information can and should be kept confidential and covered by a Confidentiality Agreement.  Information given to an LPC in confidence, commercial information, and sensitive personal information for instance may fall into that category.  Not divulging such information does not break the Nolan principles, but careful judgement is sometimes required as to whether openness or confidentiality should take precedence.

 

As a matter of good governance, it is advisable that LPC Secretaries sign a Confidentiality Agreement.

 

For those LPCs who require all individual members of the LPC to sign a Confidentiality Agreement, a model is attached at

 

In both cases, the Confidentiality Agreement should be on LPC headed paper and allow for the member’s signature.

 

Corporate responsibility

 

During a debate on an issue at an LPC meeting, members can express their views freely and firmly.  However, once a decision has been taken by the LPC then that decision is binding on all members irrespective of any counter views which may have been expressed during the debate.

 

Corporate responsibility means that individual members will explicitly state only the LPC’s collective view on an issue and, as an LPC member, will not say or do anything to undermine the LPC’s position.

 

Individually LPC members have little if any power.  The personal or individual views of an LPC member have little relevance outside of the LPC.  The only view that is relevant is that of the LPC collectively.

 

It is important that LPC members make sure they are aware of the views and concerns of the contractors they represent – where a decision is to be made that will significantly affect contractors or a major financial expenditure is planned a more formal consultation may be needed or a meeting of contractors may need to be called.

 

Openness and transparency

 

LPCs are accountable to contractors for the way in which they conduct their business which should be done in an open and transparent manner.

 

As a matter of good governance, the agenda for LPC meetings should be freely available to contractors as should the minutes of LPC meetings.  There should be no issues on the LPC agenda or in the LPC minutes which Committee would want to hide from those to whom it is accountable – contractors. The only caveat to this is that where certain confidential information is being considered, particularly commercially sensitive information, then this should be dealt with appropriately in the agenda item and either minuted in a sensible fashion or in a separate confidential minute book.

 

The LPC should ensure that an Annual General Meeting is held to account to contractors on the work of the Committee and its finances.  Sufficient notice should be given to contractors of the AGM and provision made for questions and comments to be put by contractors to the Committee at the meeting.

 

The LPC should ensure that its annual report and accounts is sent to every contractor with the notice of the AGM.  At the AGM the Treasurer should explain the accounts to contractors focussing on any unusual items of expenditure, the honoraria paid to officers of the LPC if not clearly shown in the accounts, standard allowances paid to LPC members for their work.  The Treasurer should also provide information on levy collections and expenditure in the current year at regular LPC meetings.

 

As part of the discharging of its duties, openness, and accountability LPCs should provide regular reports to their contractors.  LPCs should consider whether the Annual Report is sufficient for this purpose or whether more frequent reports are necessary.  Some LPCs issue regular reports or newsletters throughout the year.

 

Financial governance

 

Many of the principles of governance impinge on financial accountability. Contractors who fund the LPC will expect openness and accountability in the way their levies are spent. The starting point is to separate the role of Secretary and Treasurer, so the posts are held by different people. This will for example mean that there will be two separate signatures on cheques – an important governance safeguard.

 

The Treasurer should give regular updates on finance at meetings of the LPC and prepare annual accounts in sufficient detail, audited by a professional with a practising certificate. Those accounts should be made available to contractors with the opportunity to query the accounts at the AGM. A copy of the accounts should also be sent to the PSNC. The LPC should note that levies collected from contractors can only be used for the purpose intended: to defray the administrative costs of the LPC.

 

If the LPC works with an LPC supported provider company the LPC must ensure there is good governance to ensure the committee does not breach the LPC constitution, or misuse or mismanage LPC funds and resources in its dealings with the provider company. See the attached PSNC template governance statement ‘LPC Governance – setting up and working with a local provider company’ attached Appendix 5.   This is also available as a PSNC template policy document.

 

Delegation of powers

 

Sometimes LPCs may set up working groups or sub-committees to deal with specific or detailed issues.  When setting up such groups, the main committee may give certain powers to the sub-group.  In such cases, the LPC should set out very clearly the remit for the group with absolute clarity in the powers that the group has, together with an instruction that no action should be taken by the sub-group beyond its remit and powers without referring to the LPC.

 

Similarly, the LPC may delegate power to individuals such as the LPC Secretary or Chairman – often this is power to act in an emergency where it is not possible to call the LPC together.  It is wise to set out the nature and limits of such delegation in writing and to ensure they are adopted formally by resolution of the LPC. The powers given to those individuals should be clear, as should the circumstances in which the power may be exercised.  Care should be given not to grant too wide a discretion to individuals or sub-groups in the exercise of power and responsibilities.

 

Enforcing governance

 

Whilst the committee may have rigorous and thorough governance arrangements in place, what sanctions should be applied in cases where the provisions are breached?

 

In most of cases, the integrity of individuals and peer pressure will be sufficient.  However, sanctions can only be applied if the LPC has the power to do so, those powers should be clear, and members should be aware of the powers which can be exercised in such cases.  The LPC gets its power from its constitution and the model LPC constitution provides the powers to deal with possible breaches of governance both in how the matter is investigated and sanctions if a breach is found. Those LPCs who suspect a breach of governance requiring the exercise of this power are advised to contact Mike King at PSNC for advice.

 

Governance health check

 

A failure by the LPC to have sound governance arrangements in place could result in challenges or possibly legal action against the LPC by contractors suffering injustice or financial loss as the result of the LPC’s weak or lacking governance framework.

 

As unincorporated associations such a claim could mean that LPC members personally would be liable for any costs or compensation because of any successful legal action by an aggrieved contractor. Good governance arrangements provide a safeguard for LPC members.

 

LPCs are advised to consider the principles of good governance and ensure that all members are aware of their duties and obligations in this area.  It is particularly important that new members are informed as soon as possible – perhaps as soon as notification of election. It is also advisable that all members and LPC Secretaries/CEOs complete a written Declaration of Interests and sign a Confidentiality Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CODE OF CONDUCT – DECLARATION OF INTERESTS

 

Name:                                                                                                                                                 

 

1. Remunerated Directorship of company(s) (public or private) and businesses owned personally or in partnership

 

 

 

 

 

 

2. Remunerated employment or offices

 

 

 

 

 

 

3. Remunerated Consultancy(s)

 

 

 

 

 

4. Remunerated work performed under contract

 

 

 

 

 

5. Names of companies or other bodies in which I have an interest, either on my own account, my spouse or infant children, for a beneficial interest in shareholdings greater than the 10% of the share capital

 

 

 

 

 

 

6. Remunerated contributions to professional and scientific publications

 

 

 

7.

Membership of other pharmaceutical bodies

 

 

 

 

 

 

 

I agree to update this document at any time there is a change in my interests

 

 

Signed:                                                                                  Date:                                   

 

 

 

 

APPENDIX 3

 

 

DRAFT CONFIDENTIALITY AGREEMENT FOR LPC SECRETARIES

 

 

I understand that during my work as LPC Secretary I will produce or acquire information that will be commercially sensitive or may for other reasons be information that the LPC or the pharmacy contractor(s) to whom the information relates would not wish to be communicated to third parties.

 

I acknowledge my obligation to ensure that I do not make use of any such information for purposes other than those of the LPC, and that I seek prior consent of the Chairman of the LPC before making any use of my office or any information produced or acquired because of it. I further acknowledge that all information received from or about contractors that relates to their business and financial affairs may not be disclosed to anyone without the express consent of the contractor to whom it relates.

 

I will make full disclosure to the LPC of all appointments or offices held by me and I will consult the LPC prior to accepting any appointment or office that may reasonably be thought to be relevant to my work as secretary.

 

 

 

 

Signed                                                                    Date                                                    

 

 

 

 

APPENDIX 3A

 

DRAFT CONFIDENTIALITY AGREEMENT FOR LPC MEMBERS

 

 

I understand that as an LPC member I may have sight of or acquire information that will be commercially sensitive or may for other reasons be information that the LPC or the pharmacy contractor(s) to whom the information relates would not wish to be communicated to third parties.

 

I acknowledge my obligation to ensure that I do not make use of any such information for purposes other than those of the LPC.  I further acknowledge that all information received from or about contractors that relates to their business and financial affairs may not be disclosed to anyone without the express consent of the contractor to whom it relates, in which case the disclosure will be through the LPC Secretary.

 

I will make full disclosure to the LPC of all appointments or offices held by me and I will consult the LPC prior to accepting any appointment or office that may reasonably be thought to be relevant to my membership of the LPC.

 

 

 

Signed                                                                    Date                                    

 

 

Print Name                                                                        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix 4

 

LPC Governance Checklist

 

Committee Procedures

  • LPC Governance Principles agreed and adopted at an LPC meeting, minuted and document annotated with date of agreement
  • LPC Governance Principles accompany all LPC meeting papers
  • LPC Governance Principles posted on the LPC website
  • Check decisions or actions are within the powers of the LPC provided in the constitution
  • Have Declarations of Interests available for inspection at all LPC meetings
  • Make LPC meeting agendas and minutes available to contractors e.g. on a website
  • Keep contractors informed of committee business your newsletters, website etc
  • Consult contractors when appropriate before significant decisions
  • If delegating responsibility set remits and conditions
  • Minute LPC meetings clearly and fully.
  • Provide an induction procedure for new LPC members to include LPC governance (a New Members Induction Pack is available on the LPC members area of the PSNC website and PSNC also runs new members induction days)
  • Hold an AGM each year in accordance with the constitution
  • Prepare an Annual report to contractors
  • Appoint a member or subcommittee (such as an audit committee) to monitor governance.
  • Chairman to rule on dealing with conflicts of interest
  • Chairman to conduct meeting in accordance with standard meeting procedures

 

LPC Members

  • Read the PSNC Governance guide
  • Be aware of and conform to duties of the LPC set out in the LPC constitution
  • New members read the PSNC Governance guide and sign to accept the LPC Governance Principles
  • New members read the PSNC new members Induction pack or local equivalent
  • Complete and keep updated Declaration of Interest form
  • Sign confidentiality agreement
  • Declare any conflicts of interest at LPC meetings as appropriate
  • Adhere to corporate responsibility
  • Ensure members have relevant training to discharge their role. PSNC provides training on issues relating to LPC business

 

Finance

  • Separate the role of secretary and treasurer
  • Prepare annual accounts with sufficient detail of income and expenditure
  • Accounts audited by professional with practising certificate
  • Ensure levy is used for administrative purposes only
  • Members scrutinise budgets and annual and regular management accounts as part of their duty to ensure contractors funds are being managed properly

 

 

Governance and NHS England local team

  • Provide the NHS E with a copy of the LPC constitution and, as a matter of good practice, the LPC governance principles
  • Seek recognition from the NHS E (for a new LPC)

 

 

Appendix 5

LPC Governance – setting up and working with a local provider company

As a representative body recognised by NHS England, LPCs cannot be a provider of services. Under the model LPC constitution an LPC may facilitate the setting up of a provider company if all contractors in the LPC area can join or otherwise engage with the company.

Whilst LPCs and local provider companies will liaise and support each other – the LPC promoting community pharmacy, creating commissioning opportunities, and generating and developing services – the provider company must be, and seen to be, a separate entity.

This document suggests the governance principles to guide LPCs and to ensure the committee does not breach the LPC constitution, or misuse or mismanage LPC funds and resources in its dealings with the provider company. We recommend that the attached document is considered by the LPC, with approval recorded in the LPC minutes and then forms part of the LPC’s governance code. Good practice would be to post the document on the LPC website. The PSNC Governance guide now includes the document.

The document can be adopted in its entirety for those LPCs starting the journey to facilitate the setting up of a provider company. Those LPCs that have already set up a provider company may choose to adopt just the provisions relating to working with an LPC supported provider company.

This is also available as a PSNC template LPC policy document.

For further information see:

  • PSNC guidance for LPCs considering involvement in the setting up of a provider company
  • Template Rules and Articles provided by PSNC for a company limited by guarantee
  • PSNC briefing on forming a provider company

All are available on the PSNC website LPC Resources Centre.

 

 

 

 

LPC governance and the local provider company

The MSW LPC has adopted and adheres to the following principles to govern it’s work with an LPC supported local provider company.

Setting up the provider company

  1. The LPC will consider a business case to support a proposal to facilitate the setting up of a provider company before committing LPC funds or resources.
  2. The LPC will consult all its contractors on the proposal to facilitate the setting up of a provider company.
  3. As part of the consultation contractors will have:
    1. The draft Articles and Rules for company limited by guarantee or equivalent for an alternative body corporate
    2. The business case for the proposed company
    3. A statement of the amount of any loan from LPC levy income to establish the company
    4. A form for each contractor to vote on the Articles and Rules and authorise the LPC to loan a specified amount of levy income to establish the company.
  4. The LPC will hold an EGM of contractors to discuss and vote on the proposals and any loan in person, adding in postal votes from non-attenders.
  5. The LPC will monitor and manage time taken by its officers or members in setting up the company and act if excessive.

Working with an LPC supported provider company

  1. Funding provided to an LPC supported provider company will be by way of a loan; contractors levy income will not be gifted to the provider company.
  2. Any loan of contractors’ funds to the provider company will be transparent using a formal loan agreement such as that available from PSNC. The LPC will take the necessary action to protect LPC funds if the provider company defaults in the performance of any obligation under the loan agreement.
  3. The LPC is accountable to contractors and will exercise due diligence in agreeing to the loan and its recovery.
  4. The LPC shall appoint directors to the board of the company who will look after the LPC’s interests. In accordance with corporate governance the LPC directors will be allowed to act independently, in line with their director’s duties, and will not be subject to external control or direction.
  5. The LPC will draw up a formal Memorandum of Understanding (MoU) setting out the terms of the understanding between the LPC and the company using the template available from Healthcare Together or similar. The MoU will also detail any loan arrangements.
  6. The LPC will be mindful that the company is not the LPC’s provider company, it is a company for contractors. The LPC will respect that the company is a separate legal entity and will not seek to direct or control its activities other than properly done so by its directors on the board.