Association of British Insurers: Walker review should improve corporate governance

Association of British Insurers: Walker review should improve corporate governance

Association of British Insurers: Walker review should improve corporate governance

Responding to publication of Sir David Walker’s report into corporate governance of UK banks, Peter Montagnon, the ABI’s Director of Investment Affairs, said:

“This is a valuable contribution to the debate on the banking crisis. It represents the first stage in the process of improving governance. We support non-executive directors devoting more time to their role, having better induction and training, and being subject to rigorous performance evaluation. We also agree that more needs to be done on board accountability, however we believe that the chairs of each main board committees standing, as suggested in the ISC paper, is a better way to achieve this.

“Much of what Sir David says is in line with the Institutional Shareholders Committee’s (ISC) statement on the responsibilities of institutional shareholders. We will, together with other ISC members, continue to work to turn the statement into a Code, which institutions may report against a comply-or-explain basis. However, we do not believe that the authorities should assess the level of compliance – this does not happen to companies under the Combined Code.”

“In the area of collective engagement, we welcome Sir David’s view that the mechanism must be flexible and informal. Greater formality will reduce real outcomes and therefore such engagement should not be done through a bureaucratic framework.”

“Some areas need further consideration and clarification. In particular, we do not believe that the remit of non-executive directors should be extended into areas that should be performed by management. And care should be taken that in strengthening the chairman’s role and requiring greater day-to-day involvement, it does not become too dominant. Therefore further consideration should be given to the role of the Senior Independent Director.”

Notes

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