UK: FRC - preliminary lessons from the financial crisis

The Financial Reporting Council chief executive, Paul Boyle, has today delivered a speech in which he identified some preliminary lessons from the financial crisis with regard to corporate governance and the Combined Code on Corporate Governance. Mr Boyle observed (emphasis in the original):

With respect to the FRC’s responsibilities for Corporate Governance, it is the case that the current market difficulties have raised questions about corporate governance in the UK’s banks and, perhaps, these questions will extend to other financial institutions. Our preliminary conclusion is that the primary questions should not be about the standards of corporate governance in these institutions but rather the practice of it. Our view is that the standards set out in the FRC’s Combined Code remain comprehensive and appropriately principles-based standards.

We expect that directors of banks and other financial institutions are already reviewing their governance and risk management practices. We, therefore, currently believe that the recent difficulties in the financial sector do not require a generalised tightening of governance standards across the UK corporate sector. The focus should be on whether the existing standards have been observed in practice".