- Elgar Financial Law and Practice series
Iris H.-Y. Chiu, Michael McKee, Anna P. Donovan, Rod Edmunds, Andreas Kokkinis Kokkinis, John Lowry, Marc T. Moore and Arad Reisberg
Chapter 3: DIRECTORS’ DUTIES AND LIABILITIES: DISQUALIFYING ‘UNFIT’ DIRECTORS AT BANKS? POLITICAL RHETORIC AND THE DIRECTORS’ DISQUALIFICATION REGIME
In the wake of the global 2008 banking crisis and the more recent LIBOR scandal numerous committees have reported on both the need to improve the governance of banks and the need to construct a more rigorous and responsive regulatory regime for UK financial institutions and one which also holds the potential to sanction directors of banks for reckless mismanagement. The focus has been on achieving two objectives: first, how best to raise standards of directorial behaviour by ensuring that directors of banks accept individual responsibility for engaging in high-risk conduct which not only jeopardises the financial stability of their institutions but also the wider economy; and, second, on devising effective measures aimed at deterring such conduct. In relation to the latter, little attention has been paid to the potential for the directors’ disqualification regime to fulfil this objective, notwithstanding the political rhetoric suggesting its value and relevance. Although, the Business Secretary, Dr Vince Cable, has, in the last few years, been vigorous in canvassing disqualification as a worthwhile response to individual bankers’ managerial excesses, this has so far not borne fruit in terms of judicial proceedings. And, somewhat inexplicably, there has been a barely perceptible shift in the political and legal landscape.
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