The House of Commons Treasury Committee has today published a further report as part of its examination of the banking crisis. This new report - available here (html) and here (pdf) - focuses on corporate governance and pay. The report is split into eight chapters: introduction, remuneration in the banking sector, remuneration in the part-nationalised banks, corporate governance, credit rating agencies, auditors, fair value accounting and the role of the media. It contains many recommendations. In the chapter on corporate governance, the Committee states, inter alia: We believe that there are a number of areas of reform which are worthy of further consideration. Firstly, whilst there may be a case for limiting the number of non-executive director or trusteeships that an individual can hold, we believe an alternative way forward would be to apply the ‘comply or explain’ approach where an individual who holds more than a certain number of posts would have to provide an explicit defence of how they will be to fulfil this role in addition to their other duties. Secondly, serious consideration should be given to whether all non-executives—or a proportion of non-executives—sitting on bank boards should be required to have professional qualifications relating to banking or other areas of relevance such as accountancy. Thirdly, we believe that there is a strong case for non-executive directors in the banking sector to have dedicated support or a secretariat to help them to carry out their responsibilities effectively. Finally, there is a need to examine ways in which the relationship between institutional investors and non-executive directors could be strengthened".
The report was discussed this morning on the BBC Radio 4 programme Today: listen here (see 0709, 0750 and 0835). For newspaper comment, which tends to focus on the actions of Lord Myners in connection with Sir Fred Goodwin's pension, see here, here and here.
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