It’s not the rules, but poor judgement and a lack of effective oversight that are at fault.
“We can no longer rely on senior management judgements… there are some management decisions that have revealed a degree of incompetence and, at times, a rather cavalier approach regarding risk management.”
So said Hector Sants, chief executive of the Financial Services Authority, in a speech to the Securities & Investment Institute Conference on 7 May. He said that as a result of flawed management thinking, the regulator warned it will take “more action against senior management where there is evidence of culpable misconduct”.
Sants outlined a number of problems that need to be resolved if corporate governance and risk management are to improve. He said there needs to be a more effective challenge in the boardroom, particularly from non-executives. He also said companies need to be more open in their dealings with regulators, shareholders and customers.
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