An EP resolution on corporate governance in financial institutions (FIs), made in May 2011, has just been published in the Official Journal of the EU (OJEU). The resolution:

  • notes the US Sarbanes Oxley Act did not protect US institutions during the financial crisis, but added significant compliance costs;
  • believes a proportionate approach combining targeted principles-based regulation and "comply or explain" codes of best practice is appropriate;
  • calls for all FIs to establish an effective governance system, including mandatory risk committees for all economically significant FIs and groups;
  • suggests other measures for measuring, monitoring and reporting risk, and responsibilities of FI boards;
  • sets conditions that remuneration policies should meet;
  • calls for better and more focused dialogue with auditors;
  • suggests institutional shareholders should take a more active role in holding the board to account; and
  • calls for all investment managers to have to state whether they apply and disclose against a stewardship code.

(Source: FI Governance Resolution in OJEU)