Blog : BOARD TALK
|Posted on July 25, 2016 at 5:00 PM|
It's hard, apparently, to be accurate about the way the wind is blowing.
The Institute of Directors (IOD) has a Director General, Simon Walker, who has been very outspoken during his term on issues of corporate governance. The IOD has even held a governance debate which resulted in a report last year saying that the UK's current approach to identifying what exactly constitutes ‘good governance’ was flawed.
So it shouldn't be surprising that today the IOD has "recommended" that Theresa May, the new Prime Minister launch a review into UK corporate governance.
"After damning reports into BHS, and last week Sports Direct, there is a pressing need to work out how to raise levels of trust in how British companies are overseen” said Oliver Parry, the IOD's head of Corporate Governance.
And, also obviously, make them actually better run for stakeholders?
Except that as my coverage on Forbes (see link for Sports Direct story) indicates, the IOD reaction at the time, while deploring the behavior of Mike Ashley, Sports Direct's CEO, seemed to be to counsel against "knee-jerk regulatory or legislative response."
Has something changed in just a few days? I mean, it would be in keeping with this summer.
Or did the IOD misread the pretty clear message of the latest parliamentary report ?
Its own chair - the first woman to hold the role - Lady Barbara Judge was outspoken recently on the need to for legislation to give the pension regulator similar powers to competition authorities to block deals or other transactions that would be detrimental to employees in defined benefit pension schemes.
She was speaking to the FT as the outgoing head of the Pension Protection Fund.
“The regulator should have the right to approve or disapprove any corporate transaction that might disadvantage pensioners.If they had had the power, we would not be in this situation" she said in an interview.
As the FT pointed out, such powers would have allowed the regulator to block the £1 sale of BHS by Sir Philip Green to Dominic Chappell in 2015.
But as often happens with new ideas around British business that seem a bit radical, over the last month it has sunk without trace.
(As an aside, I sometimes wonder if it is when ideas sink without trace it is because they are radical, or that they are proposed by women....who couldn't possibly begin to change the world. I, for one have some powerful men in the media who follow me on Twitter. They never RT and they never engage, but there they are...lurking. I wonder why....I must say something interesting from time to time. It's a little surprising, as to the mainstream media, I remain officially invisible).
Going back to the important issue of pensions. The Department of Work & Pensions and the Department of Business, Innovation and Skills are going to look into this issue now because as today's parliamentary report put it: the BHS story “begs much wider questions about the gaps in company law and pension regulation that must be addressed.” (my emphasis)
"In this case the Committee has reached a clear conclusion that the sponsoring employer was not supportive and says Sir Philip Green ‘and his directors repeatedly resisted requests from trustees for higher contributions’ to the scheme and concludes that the ‘massive deficit is ultimately Sir Philip Green’s responsibility’. This sends a welcome and strong message about employers’ duties to the millions of defined benefit pension scheme members in the UK" said Graham Vidler, Director of External Affairs, Pension and Lifetime Savings Association (PLSA).
"There are over 6,000 defined benefit (DB) schemes in the UK, with 11 million members and over £1 trillion of assets so it’s important to make sure schemes are secure and working hard for both members and the wider economy" said Mr Vidler.
It is important to recognise, he added that over the last decade employers have put a record amount of money into DB schemes generally but this has made little impact on funding levels because the challenges facing schemes are complex and varied.
The PLSA’s DB Taskforce has been set up to gain a thorough understanding of these challenges and propose some solutions. Looks like thinking heads with open minds need to come together, going forward.