In his final report of the governance of mutual life offices, Paul Myners, chairman of Marks & Spencer, said: ‘Good corporate governance is essential to all forms of business. It provides the checks and balances that ensure that firms are run efficiently and meet the objectives of their owners, whether shareholders or the members of a life mutual.
‘I have recognised that risk is inherent in the conduct of business, and necessarily so. Good corporate governance can ensure those risks are identified and appropriately managed, but it does not eliminate them, and it should not be believed that it does. Indeed, measures that sought to eliminate risk could destroy the very purpose of these entities.’
Myners said he did not consider legislation necessary for the changes to happen, but he said he expected ‘the recommendations – to be taken forward by life mutuals and their trade bodies, supported by FSA supervision’.
Recommendations include better information, including on directors’ remuneration, and for large mutuals, publication of an Operating and Financial Review, as well as helping equip non-executives to deal with the challenges they face in monitoring a complex, technical business.
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