UK: Hector Sants calls for directors' duties reform

Hector Sants, the chief executive of the Financial Services Authority, today delivered a thought provoking speech - available here - titled Do regulators have a role to play in judging culture and ethics? Whilst careful to note that he was offering his personal views, his comments are noteworthy because of the influential position he will occupy, under the new financial regulatory structure, as the chief executive of the prudential regulator and deputy governor of the Bank of England. Of particular interest are his thoughts on the scope of directors' duties:

I would thus strongly advocate intervention in the UK through changing the Companies Act framework for directors, for example. The current requirement [in Section 172 of the Companies Act (2006)] is for directors is to promote the success of the company. This is often interpreted in terms of shareholder value. Whilst this does include the need to have regard to, for example, the impact on the community, I do not believe that is sufficient. There must be a stronger and more explicit obligation to wider society. There must be clear recognition of the need for institutions to contribute to the common good".