UK: England and Wales: the reflective loss principle

The Court of Appeal decision Charles Frederick Webster v Sandersons Solicitors (a firm) [2009] EWCA Civ 830, which concerned the application of the reflective loss principle, was handed down at the end of last month. It has recently been reported in the Law Society Gazette: see here.

UK: financial regulation and the competitiveness of London

An interview with Lord Turner, the chairman of the Financial Services Authority, appears in the September edition of Prospect Magazine. Lord Turner's observations have been widely reported in today's newspapers with front page reports in the Financial Times and Guardian. The Financial Times reports:

The head of Britain’s top banking watchdog supports the idea of new global taxes on financial transactions, warning that a 'swollen' financial sector paying excessive salaries has grown too big for society. Adair Turner, chairman of the Financial Services Authority, says the debate on bankers’ bonuses has become a 'populist diversion' and that more drastic measures may be needed to cut the financial sector down to size. He also says the FSA should 'be very, very wary of seeing the competitiveness of London as a major aim', claiming the city’s financial sector has become a destabilising factor in the British economy".

Meanwhile, the Guardian's report states:

The government's top financial regulator last night backed radical plans for a multibillion-pound tax on banks as a way to tackle the City's persistent bonus culture. Lord Turner ... warned bankers that he would support a new wave of taxes on the City to prevent excessive profiteering if they continue to take excessive risks. In a searing critique of the industry, Lord Turner described much of the City's activities as 'socially useless' and questioned whether it has grown too large".

UK: the Code of Good Governance for the Voluntary and Community Sector - consultation launched

The steering group responsible for the voluntary and community sector's Code of Good Governance is seeking views on a revised version of the Code principles. The group proposes that the Code should contain six high level principles and operate on the 'comply or explain' basis. The group provides this introduction before explaining the six principles:

Good governance is acknowledged to be essential for the success of any organisation and is now more important than ever. Members of boards play a vital role in serving their causes and communities and bring passion and commitment as well as skills and experience to the organisations they lead. They provide long term vision and protect the reputation and values of their organisations. To make a difference a board needs to have proper procedures and policies in place but it also needs to work well as a team and have good relationships within the organisation. The purpose of these principles is to assist board members to enhance their decision making, increase their accountability and enable them to provide strong leadership. This will in turn assist the people and causes their organisations were set up to benefit.

The six high level principles are designed to be universal and applicable to all voluntary and community organisations. It is the practice and procedures which will vary according to the type and size of the organisation. Underlying each principle is the additional principle of equality-that of ensuring equality, diversity and equality of treatment for all sections of the community. We consider that this is fundamental and it is embedded in all the principles.

In the Code we have used the term “the board “to mean the organisation’s governing body. In your organisation it may be called the board (or board of directors or board of governors) the trustees, the management committee or some other name. It is the body with overall responsibility for governing the organisation, overseeing and controlling its management.

A good board will provide good leadership by:

i. Understanding their role.
ii. Ensuring delivery of organisational purpose.
iii. Being effective as individuals and a team.
iv. Exercising control.
v. Behaving with integrity.
vi. Being open and accountable".

A full copy of the so-called "refashioned principles" is available here. Last year a report was published which considered awareness of the Code and its impact; this report has influenced the steering group's work. 

Note: the National Council of Voluntary Organisations publishes guidance (some of which can be viewed free of charge) for those involved in the governance of voluntary and community organisations: see here. 

France: bankers' bonuses

The Financial Times newspaper reports that French banks are to be subject to new rules on traders' bonuses. The new rules provide that bonuses must be deferred over three years, one-third of the award should be in shares, and full payment must be dependent on long-term performance criteria. For further discussion, placing the proposals in their political context, see here.

Germany: updated corporate governance code published

The German Corporate Governance Code Commission has published an updated edition of its Code, following a meeting in May. Further information, including a copy of the new Code with the amendments highighted, is available here (currently only in German; a copy of the Code in English is likely to follow).