The recommendations in the Walker Review on corporate governance in UK financial institutions aim to bring about significant cultural and organisational changes in corporate governance. The Financial Reporting Council’s review of the Combined Code will look at the extent to which Sir David Walker’s recommendations should be considered best practice for all listed companies, or for a clearly definable subset of listed companies.

There have been calls in some quarters for more radical changes. It is therefore important for the wider constituency of listed companies, as well as financial institutions, to be aware of the issues being debated and the changes proposed, and to consider the need to respond to the consultations.

The consultation period for the Walker Review ends on 1 October and a final report and recommendations will be published in November. Comments on the Financial Reporting Council consultation are sought by 9 October, and a further consultation is likely to follow.

This briefing considers some of the key issues which arise. The full text can be accessed here.

Key issues

  • Which of the Walker recommendations should be considered best practice for all, or some, listed companies?
  • Which institutions will be caught by the definition of “banks and other financial institutions” (BOFIs), and to what extent will different kinds of BOFIs be subject to the recommendations (as adopted)?
  • Is it realistic to expect increased engagement and longer term commitment from institutional investors, in order to support long-term performance?
  • Is the pendulum swinging too far away from the independence of NEDs, in favour of more industry expertise?
  • Will the proposed structure for improving governance of risk be effective?
  • How much more is expected of remuneration committees?
  • To what extent will the FSA or other regulatory bodies seek to enforce the recommendations (as adopted) and how might this influence behaviour?