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Vince Cable plans to force negligent bosses to compensate creditors Vince Cable plans to force negligent bosses to compensate creditors
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Fraudulent or reckless company directors could be forced to compensate creditors under proposals to be announced by Vince Cable.Fraudulent or reckless company directors could be forced to compensate creditors under proposals to be announced by Vince Cable.
The business secretary will set out plans to increase trust in UK business in a speech on Monday morning at the London Stock Exchange. In a discussion paper entitled Transparency and Trust, Cable will suggest a range of options including ordering negligent bosses to pay compensation to creditors left out of pocket by their actions and disqualifying directors who are banned outside the UK.The business secretary will set out plans to increase trust in UK business in a speech on Monday morning at the London Stock Exchange. In a discussion paper entitled Transparency and Trust, Cable will suggest a range of options including ordering negligent bosses to pay compensation to creditors left out of pocket by their actions and disqualifying directors who are banned outside the UK.
Sectoral regulators such as Ofgem and Ofcom, the watchdogs for the energy and communications industries, could be given the power to disqualify directors.Sectoral regulators such as Ofgem and Ofcom, the watchdogs for the energy and communications industries, could be given the power to disqualify directors.
Cable will also follow up recommendations by the parliamentary commission on banking standards, which stated that the main responsibility of bank directors should be to ensure the safety and stability of their firms. In an email to business bodies before his speech, the Department for Business, Innovation and Skills said it would look at "whether to amend directors' statutory duties in key sectors such as banking".Cable will also follow up recommendations by the parliamentary commission on banking standards, which stated that the main responsibility of bank directors should be to ensure the safety and stability of their firms. In an email to business bodies before his speech, the Department for Business, Innovation and Skills said it would look at "whether to amend directors' statutory duties in key sectors such as banking".
In an interview with the Sunday Telegraph, Cable indicated that the failure to punish executives in the wake of the banking crisis had undermined public faith in regulation of company directors.In an interview with the Sunday Telegraph, Cable indicated that the failure to punish executives in the wake of the banking crisis had undermined public faith in regulation of company directors.
"I think the public are a little baffled by the current regime," he said. "There is an issue around the people who used to run Lloyds and RBS, and there is a worry about how the system operates.""I think the public are a little baffled by the current regime," he said. "There is an issue around the people who used to run Lloyds and RBS, and there is a worry about how the system operates."
However, Cable said the proposals would not result in retrospective action being taken against Fred Goodwin, the former chief executive of Royal Bank of Scotland, and James Crosby, the former boss of HBOS. Both lost their knighthoods in the wake of the near-collapse of the banks they once ran. Cable said: "We don't want to get into a situation where we're penalising good business people who take risks but whose business fails for whatever reason."However, Cable said the proposals would not result in retrospective action being taken against Fred Goodwin, the former chief executive of Royal Bank of Scotland, and James Crosby, the former boss of HBOS. Both lost their knighthoods in the wake of the near-collapse of the banks they once ran. Cable said: "We don't want to get into a situation where we're penalising good business people who take risks but whose business fails for whatever reason."
People who operate "rogue companies" or are involved in "serial failure" should be punished through disqualification, Cable added.People who operate "rogue companies" or are involved in "serial failure" should be punished through disqualification, Cable added.
Nonetheless, the pre-speech briefing to business bodies states that errant directors could be offered a way back into corporate life through education or training to "equip them with the skills they need to go on to run a successful company". The business department bans about 1,200 company directors a year.Nonetheless, the pre-speech briefing to business bodies states that errant directors could be offered a way back into corporate life through education or training to "equip them with the skills they need to go on to run a successful company". The business department bans about 1,200 company directors a year.
The transparency element of Cable's proposals includes measures to strip away concealed ownership of companies, such as requiring businesses to hold information on their owners and controlling shareholders. This will include tackling the issue of bearer shares, which confer ownership without requiring the holder of the shares to be identified in public, and the use of nominee directors, who can be a cover for the real owner of a business.The transparency element of Cable's proposals includes measures to strip away concealed ownership of companies, such as requiring businesses to hold information on their owners and controlling shareholders. This will include tackling the issue of bearer shares, which confer ownership without requiring the holder of the shares to be identified in public, and the use of nominee directors, who can be a cover for the real owner of a business.
Although the paper sets up a wide-ranging discussion and consultation with business bodies, it is unlikely that any of the proposals will find a place on the statute book before the 2015 general election.Although the paper sets up a wide-ranging discussion and consultation with business bodies, it is unlikely that any of the proposals will find a place on the statute book before the 2015 general election.
This month the government was accused of missing an opportunity for radical City reform when it failed to back key recommendations from the commission on banking standards, including an overhaul of how the Bank of England is managed and tightening a measure of capital called a leverage ratio.This month the government was accused of missing an opportunity for radical City reform when it failed to back key recommendations from the commission on banking standards, including an overhaul of how the Bank of England is managed and tightening a measure of capital called a leverage ratio.
Andrew Tyrie, the Conservative MP who chaired the commission, said reforming the culture of banking required the implementation of the full suite of recommendations. He said: "On an initial reading, the government's response appears to fall short on a number of important points." The government recommendations from the commission report will be included in the banking reform bill being debated in parliament.Andrew Tyrie, the Conservative MP who chaired the commission, said reforming the culture of banking required the implementation of the full suite of recommendations. He said: "On an initial reading, the government's response appears to fall short on a number of important points." The government recommendations from the commission report will be included in the banking reform bill being debated in parliament.
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