FSA wants 'red card' for bosses
DIRECTORS who break corporate governance rules could be banned under proposals before Trade and Industry Secretary Patricia Hewitt.
The Financial Services Authority has asked her department for a new 'red card' option to disqualify directors, in a bid to beef up its plans to police the City and boardrooms.
The watchdog is due to issue its first fines of directors found guilty of breaking the UK listing authority's rules. But it believes it needs to increase its powers as a further warning to companies.
'The DTI has the power to disqualify directors but we have been given powers to censure directors, a reprimand which amounts to a yellow card,' said Ken Rushton, head of the FSA's listing authority. 'I am suggesting that we have the power of the red card.'
He was speaking in a debate on the future of corporate governance at the CBI conference in Birmingham.
The growth in corporate governance rules under the Higgs Report were criticised by Warren East, the chief executive of IT group ARM Holdings.
He said new rules on the composition of boards meant companies were having to reduce executive numbers to ensure they do not outnumber non-executives.
East said that when companies sought to explain why they did not adhere to certain regulations they were jumped on by 'box-ticking' bodies, like the Association of British Insurers and the National Association of Pension Funds, for breaching rules.
He indicated ARM could drop its dual listing on Nasdaq because of higher listing costs.
