The chief executive of the Financial Reporting Council, Paul Boyle, today delivered the keynote speech at the London Stock Exchange's corporate governance conference. In his speech, titled "Current corporate governance developments - the regulator's perspective", Mr Boyle said that it was too early to decide what changes, if any, should be made to the UK system of corporate governance in response to the financial crisis. He instead used his speech to address the following matters: [1] the purposes of corporate governance; [2] the UK regulatory approach to corporate governance; [3] preliminary thoughts on the governance aspects of the financial market crisis; and [4] corporate governance of audit firms. Of interest are Mr Boyle's comments on the argument that the current model of market based enforcement should be replaced by regulatory monitoring and enforcement. In response to this point, My Boyle observed:
We at the FRC have considered this option on several occasions in recent years but have always come to the same conclusion. We ... have not thus far identified an alternative which could be more effective in improving the practice of corporate governance in a manner that would be consistent with the better regulation principles that regulatory actions must be targeted and proportionate. Our minds remain open on this question but we do think that those who recommend greater regulatory intervention need to take on the challenge of specifying how it would work in practice and how it would lead to improvements in decision-making by boards and behaviour of individual directors. Making regulatory judgements about whether a set of financial statements complies with accounting standards is one thing; making regulatory judgements about the quality of board decision-making is quite another".
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