The Treasury select committee is to look at the role boards, shareholders and non-executives play in financial services institutions as part of an inquiry into corporate governance and remuneration in the sector.
The inquiry’s terms of reference say it will look at the type of corporate culture financial services firms should try to foster and how it can be encouraged, as well as how old and new regulation has affected the issue.
It will also consider whether the management of risk has improved since the crisis and whether having more diversity on boards would improve company performance.
The investigation will also look at the idea of introducing a strict liability for bank executives, an idea recently raised in a private members bill in Parliament.
TSC chair Andrew Tyrie says: “The task of improving corporate governance is not just about avoiding mistakes of the past but also providing opportunities for the future. The global financial marketplace will locate to places with high quality governance. So the UK can benefit by taking a lead on improving it.”
The inquiry will look at whether non-execs should bear greater liabilities than they do now and whether executives and FTSE 100 companies should be able to hold non-exec positions in other firms.
The committee will investigate whether shareholders in systemically important financial institutions should be required to exercise a stronger role.
Tyrie says: “In systemically risky institutions, it is particularly important to find a way to encourage more constructive engagement with shareholders on crucial governance issues, including risk and remuneration. We will look at whether, and if so how, they can and should do more. Rightly, shareholders have shared the blame and the losses.”