The Government welcome the publication today of the final report of Sir David Walker’s independent review of the corporate governance of UK banks and other financial institutions.
The corporate governance failures identified by the review contributed significantly to the financial crisis. Improvements in board practice, risk management, control and disclosure of remuneration, and the exercise of investors’ ownership rights are required to address these fully.
Sir David’s comprehensive recommendations are a world-leading response to the governance failures identified and will ensure that the UK remains at the forefront of improving corporate governance in the banking sector.
The Government will move quickly to implement the review recommendations, working closely with other bodies to which the review has directed recommendations for implementation.
The Secretary of State for Business Innovation and Skills has today written to Sir Christopher Hogg, the chairman of the Financial Reporting Council, asking the FRC to take responsibility for a new stewardship code for institutional investors, which was recommended by Sir David.
The FRC, which is currently reviewing the combined code, will consider how it intends to address the recommendations directed to it. Similarly, the FSA will be considering how to take forward the recommendations applying principally to financial institutions. The Government are seeking powers in the Financial Services Bill to permit it to make regulations implementing the review’s remuneration disclosure recommendations.
The detail of the recommendations and the specific means of implementation may be subject to further development or consultation as appropriate.
The Government will continue to work with their international partners to ensure an appropriate and consistent global response to bank corporate governance failures.
Copies of the final report have been deposited in the Libraries of both Houses.