Government to implement Walker reforms on pay and governance
Submit Articles Back to Articles
Issued 26 November 2009
The Government will move quickly to implement the reforms of bank pay and
governance proposed today by Sir David Walker.
Sir David’s review was commissioned by the Government earlier this year to
explore failures of corporate governance and management of banks. His final
report suggests a series of reforms to strengthen the role of shareholders,
improve the quality of bank boards, and to increase transparency of pay and
Chancellor of the Exchequer Alistair Darling said:
“One of the fundamental causes of the financial crisis was bad management of
some our major banks. Too many people around board tables did not ask the right
questions; some chief executives did not fully understand the risks being taken
by their traders; pay and bonuses encouraged reckless risk taking instead of
responsible behaviour. Banks failed because some of the top people running
banks failed to do their jobs.
“Tougher regulation, including stronger capital and liquidity requirements,
reform of the mortgage market, greater competition, consumer protection, and
living wills will help to make our system safer for the future. But the culture
of the banks themselves must change.
“Sir David’s proposals are the blueprint for how banks must be run in the
future. His interim report recommended changes to control bonuses that have
already become part of a global standard agreed by the G20. The Government
strongly supports his recommendations and will take steps to implement them as
soon as possible.”
Sir David’s report recommends action to be taken by the Government, the
Financial Services Authority, the Financial Reporting Council, bank owners, and
the banks themselves. For its part, the Government accepts all the
recommendations and will begin immediate work to implement them.
Specifically, the Government’s Financial Services Bill will allow the
Treasury to issue regulations forcing banks to disclose in bands the number of
staff earning more than £1million per annum. We will issue draft regulations
for consultation in the New Year and bring them into force as soon as
practicable after enactment of the Bill. This will force disclosure for the
2010 performance year.
In addition, the Financial Services Secretary Paul Myners will shortly meet
with major institutional investors to discuss steps they can take to implement
Walker’s recommendations as owners of UK banks.
About the Author
© Crown Copyright. Material taken from HM-Treasury. Reproduced
under the terms and conditions of the Click-Use Licence.
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2009-11-29 21:58:44 in Economic Articles