UK lawmaker calls for shaking up membership of bank boards

Banks need to recruit a wider assortment of non-executive directors to their boards to end the kind of “group think” that lay behind the financial crisis, a senior British lawmaker said on Wednesday.

Non-executive directors failed to ask bank bosses tough questions before the 2007-2009 crisis, said Nicky Morgan, who was elected as chair of parliament’s Treasury Select Committee in July, and that remains an issue today.

“It’s getting the right people on boards, asking the tough questions, to be unpopular with their executive officers,” Morgan told a Resolution Foundation think tank meeting to debate whether UK banking has changed since the crisis.

Companies hire non-executives from the same mould as existing members, the former minister for women and equalities said.

“There is still far too much recruitment in the board’s own image,” said Morgan, a member the governing Conservative party. The Treasury Select Committee drove through regulatory changes after the crisis, and Morgan said those reforms would be reviewed a decade after Northern Rock became the first bank in a century to trigger a run. “We are going to look at the whole architecture, 10 years on,” Morgan said. The crisis forced the government to inject billions of pounds into ailing banks, and since then the committee has held marathon sessions to make sure regulators and bankers toe the line. (RTRS)