SUBMISSION BY MBA ASSOCIATION OF IRELAND TO THE FINANCIAL REGULATOR

Transcription

1 SUBMISSION BY MBA ASSOCIATION OF IRELAND TO THE FINANCIAL REGULATOR RE: CONSULTATION PAPER CP41 CORPORATE GOVERNANCE REQUIREMENTS FOR CREDIT INSTITUTIONS AND INSURANCE UNDERTAKINGS 30 June 2010 The MBA Association of Ireland (MBAAI) Limited is incorporated in Ireland at 2 Woodgreen, Hillview, Waterford City, Ireland. Company Registration Number Charity Registration Number: CHY13695 Directors: Liam Fennelly (President), Greg Devlin, Anthony Harbourne-Thomas, Gerard Cavanagh, Anna Mooney, Robert Cooper, John Grogan, Tim Regan, Anthony O Riordan, Mary McEvoy, Rory McClurg.

2 CONTENTS: The MBA Association of Ireland Background... 3 CP 41 Review and Suggestions... 4

3 The MBA Association of Ireland (MBAAI) The MBAAI is the representative body for graduates of MBA Programmes (Masters Degree in Business Administration) from the 14 University Business Schools and Further Education Colleges on the island of Ireland MBAAI Profile in brief: Formed in 1967 there are 6 chapter areas Northern Ireland, Dublin, Galway, Limerick, Cork, Waterford. Our objective is to promote excellence in Management and to encourage business networking for the benefit of local economies. Membership 1500 Senior Managers, Directors, Decision Makers and Influencers. Our members represent over 1000 Companies as well as Public and Private Sector bodies throughout Ireland north and south. The majority of the island s business schools are corporate members of the MBAAI including Smurfit Business School (UCD), DCU Business School, UCC Business School, NUIG, Kemmy Business School (UL), WIT and Ulster University Jordanstown Further Information: For further information on the MBA Association of Ireland look up

4 Review and Suggestions Review: The MBAAI fully supports the Regulator s proposals on: 1. Minimum numbers of directors 2. Limiting the number of directorships held by individuals 3. Reviewing board membership every three years 4. The separation of the roles of Chairman and CEO 5. Setting the risk appetite 6. The minimum requirements of board committees 7. Compliance We believe these guidelines will ultimately benefit all stakeholders. Suggestions: Independent Non-Executive Directors: Re paragraphs 7.3 and 7.4, while we agree fully with the definition of Independent Non-Executive Directors (INEDs), and that they should form a majority on the board, we believe that a minimum level of qualifications should be specified eg. Chartered or Certified Accountant, MBA or equivalent, as opposed to requiring relevant skills, experience and knowledge. Traditionally, INEDs have been brought on to a board because of a specialist skill or knowledge and therefore may not be confident to challenge decisions outside their sphere of specialism. To provide an independent challenge to executive directors an INED needs a broad and detailed knowledge of all aspects of a business, not just accounting, auditing and risk management as suggested in paragraph 7.4. An essential requirement should be an ability to perceive issues at different levels of abstraction. In the final analysis, financial institutions are businesses with strategies pertaining to human resources, marketing, business policy, communications and information technologies, operations management etc. Independent non-executive directors should have proven academic qualifications well beyond adequate training about the operations and performance of the institution.

5 We would suggest that paragraph 7.6 should specifically exclude appointing INEDs who are associated with other competing financial institutions and that executive directors of financial institutions should not serve on boards of companies who are, or may be in the future, customers of the financial institution. We recognise that some foreign-owned institutions will have difficulty with the proposals on INEDs, Chairmen and the limitations on the number of individual directorships contained in CP 41 and that some flexibility will be required. The overall spirit of the document however should benefit institutions in the long-run both domestic and foreign owned. The Board of The MBA Association of Ireland