Responding to the news that two former executives of the Co-operative Bank have today been barred from holding senior financial services positions, the Institute of Directors warned all directors of the danger of complacency on boards. Simon Walker, Director General of the IoD, said:
“This is further proof that the leadership of the Co-operative Bank in the run up to its spectacular failure was woefully lacking in the skills, knowledge, and decision-making needed for a major financial institution. It is stark reminder that even brands which carry a positive public reputation can have it snatched away from them if their corporate governance isn’t up to scratch.
“The Prudential Regulatory Authority has censured two executives for putting short-term profits ahead of the long term sustainability of the bank, but there was clearly also a failure on the part of the whole board.
“Non-executive directors are there to constructively challenge executives on their actions. Where they do not, as at the Co-op, it can be to the great detriment of the organisation’s employees and customers. The Co-op traded on its reputation as an ethical and reliable bank, but while senior executives and the board may have believed their own hype, they manifestly failed to embody these principles, with devastating results.”
The IoD believes training for non-executives, including trustees of charities and third sector organisations, is vital for good governance and holding executives to account. A new training and professional development course, designed specifically for charity trustees will be launched on the IoD in London on 5th May 2016.