Audit, Risk and Compliance Commitee

The Committee members are Kent Atkinson (Committee Chairman), Lord Blackwell, Crawford Gillies (appointed on 1 March 2007) and Baroness McDonagh (appointed on 13 March 2007) - all of whom are considered by the Board to be independent non-executive Directors, with at least one member having recent and relevant financial experience. Gerry Grimstone resigned from the Committee on his appointment as Chairman of the Company, and Jocelyn Proteau resigned from the Committee on 29 January 2008.

The remit of the Committee is to consider any matter relating to the financial affairs of the Group, its internal and external audit arrangements and its internal control and compliance arrangements, and to make appropriate recommendations to the Board. Given this extensive focus, the Board approved the recommendation that the Committee should be renamed the Audit, Risk and Compliance Committee in August 2007. The Committee's terms of reference are available from the Group's website at www.standardlife.com. The Committee is required to meet at least four times a year. At least once a year, it meets with the external and internal auditors without management being present. Committee meetings are also attended by the Group Chief Executive, the Group Finance Director and other members of senior management, including the Head of Internal Audit and the Chief Risk Officer and Group Actuary, as appropriate.

The Committee reviews the intended publication of the Annual Report and Accounts of the Group and any formal statements relating to the financial performance of the Group and Group companies. This includes consideration of significant accounting policies, estimates and judgements applied, any changes made to these during the year, and the views of the external auditors. It considers the effectiveness of the Group's internal audit function, monitors the external auditors' independence and objectivity, within the context of regulatory requirements and professional standards, and assesses the effectiveness of the external audit process.

As part of its review of the effectiveness of the external auditors, the Committee assesses their qualifications, expertise and resources and considers the scope and planning of the external audit of the Group, reviewing the findings with the external auditors. The Committee is also responsible for making a recommendation to the Board on the appointment, reappointment or removal of the external auditors and approves their terms of engagement and remuneration for audit services. A policy on non-audit services provided by the external auditors is monitored by the Committee. The aim of this is to support and safeguard the objectivity and independence of the external auditors, by ensuring that the audit services provided are not impaired by the provision of certain non-audit services. The policy prohibits the auditors from performing certain types of non-audit services and ensures that where non-audit fees are significant, they are subject to the Committee's approval.

In considering the effectiveness of the internal audit function, the Committee reviews the scope and planning of the internal audit programme for the Group and ensures that the internal audit function is adequately resourced. The Committee also considers the effectiveness of existing processes and initiatives to manage key Group risks, receiving regular update reports from the Chief Risk Officer and Group Actuary.

The Committee also reviews the arrangements for employees of the Group to raise concerns, in confidence, about possible impropriety in financial reporting and other matters. Any concerns are independently investigated and the Committee ensures that appropriate follow-up action is taken.

The remit and effectiveness of the Committee are reviewed annually. In undertaking its duties, the Committee is authorised by the Board to obtain any information it requires from any Director or employee of the Group, and to seek, at the expense of the Group, appropriate professional advice inside and outside the Group, whenever it considers this necessary.

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