When will they learn?

When will the Government learn that the financial and banking industry needs a fundamental overhaul , starting with its governance. Who were the people sitting as non- executives on the Banks and hedge fund Boards? Were they exercising proper scrutiny? Or were they encouraging the bad practice that has now ruined our economy ?

The Government now has the chance ,through its ownership of shares, to insist on a different approach to governance. Are they? Clearly not . I read today that the Government have appointed their 2 non executives to the Board of Lloyds-TSB Bank . And who are they ? Well ; the usual suspects ! Tony Watson , who has retired as head of the Hermes pension management fund , and Tim Ryan , CEO of the US Securities Industry and Financial Markets Association . Does this fill you with confidence that we will now have the level of non executive scrutiny we need? This is a bad decision . We should have had people appointed to guarantee proper accountability and who are not drawn from the banking or financial world. . People to clean out the stables. To end the culture of greed in the way these people remunerate themselves . To end the bonus culture. Do you think these 2 will do that? I await their response to the Blog .

Some 6 years ago the Government established the Higgs review into Corporate governance in the commercial sector. It was roundly critical of the practice of appointing people to boards , mainly white , male , and stale People who were recruited generally through informal methods like the Golf Club. practically no open advertising . And the make up of UK Boards largely excluded women or BME candidates . ACEVO made representations to the Higgs review and we said that there needed to be a wider pool of candidates. We said that many Third Sector CEOs would make excellent Non Executives . many ran large businesses . Higgs agreed with me and he recommended a further review. That led to the establishment of the Tyson Task Force . Tyson was the dynamic head of the London Business School i sat on the Task Force . It reported .It said Boards had to be more diverse . It recommended a panel of third sector CEOs and others to draw on . And what happened . Well , you can guess. Perhaps if we had a stroppy charity CEO on a Bank Board we might have had someone to challenge the goings on ? Someone who might have suggested the bonus culture was corrupt. That you cannot possibly need to earn the millions these people paid themselves. But in any case we badly need a better mix of people on Bioards .

iow is the time for radical reform of the commercial sector and that begins with Governance . Boards must be opened up to a wider pool of talent . These posts must be openly advertised. People should be chosen on the basis of their ability to bring critical analysis and not to feel they are part of a club of like minded and like thinking individuals . If I were Government I would now be thinking of such reforms to corporate govvernance . The finacial and banking crisis began in our Board rooms . These boards did not excercise proper scrutiny . They need an overhaul .

Franklin Delano Roosevelt , in his memorable Inauguration Speech, in the middle of recession in 1933 , said ,

" The money changers have fled from their high seats in the Temple of our civilisation . We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit . "

So will Messrs Watson and Ryan be leading that charge ?

What on earth is the newly established UK Financial Investments ( the body set up by Government to manage its stake in banks ) thinking of ? If I was David Cameron , who has rightly been talking of reform and corporate soacial responsibiltiy in the private sector , I would ensure this body is either abolished or put into the hands of people who will ensure radical reform . These 2 appointments are not encouraging, though perhaps they are Round Heads in disguise? If anyone reading this Blog knows what these 2 individuals earn or will be paid in these roles I would be interested.