"Fears over governance at the Bank of England"
"Banks corporate governance under scrutiny"
(FT 23/05/11)
It seems that the Bank of England, the FSA, the Government, are all insistant that UK companies comply with the UK's Corporate Governance Code 2010 but do they comply with it themselves?
In my last blog I reflected on good governance in Government but now we turn to the Bank of England.
The question being posed by commentators is "are the non-executive directors robust enough to hold it's executives to account for the central bank's greatly expanded functions?"
The UK Code clearly states in section B.1:
"The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively"
The Code also states in section B.6:
"The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors"
And in section B.6.2:
"Evaluation of the board of FTSE 350 companies should be externally facilitated at least every three years"
Interesting then that the the Bank "declined to discuss its corporate governance".
The Bank clearly operates in a complex environment with a role to protect and enhance the stability of the financial system of the UK. It is pulled in one direction by the Government and in another by the Banks, tugging at its middle are the Corporates and Joe Public. Not an envious position. However, it can't be allowed to ignore any of these constituents. The Court of Directors needs to be made up of a mixture of these constutuents and not just from the pretty incestuous world of financial services.
Even a cursory reading of the history of banking will show how it has always sought to shroud itself in mystery and operate with terminology that effectively allows it to operate in a kind of shadowland with its own rules.
It is time for banking and financial services to come out in the full light of day and to stop hiding under the lie that "the ordinary man in the street just wouldn't understand" - well, let's give them a chance and see. I think they will understand a lot more than they are given credit for. Or is it more that the industry doesn't want them to understand? Are they being allowed to operate under some kind "super injunction" of secrecy???
Let's insist that they operate with the same transparency and accountability that they demand of the rest of us?
