In an exchange of letters between the chair of the Treasury Committee and Simon Osborne, chief exec of the ICSA, Tyrie outlined the importance of “clear and accurate” board minutes in order to help prevent mistakes like those which led to the taxpayer bailout of RBS and Lloyds, from happening again.
Tyrie said: “It took seven years of investigation for taxpayers – who were forced to bail out RBS and Lloyds to the tune of £65bn – finally to get to the bottom of what went wrong. Among the many weaknesses recognised by the regulators and parliament’s specialist advisers was the manifest failure of boards to operate properly, to ventilate discussion and record disagreement within these systemically important institutions.
“Clear and accurate board minutes are essential. When companies fail, board minutes can and should be thought of as ‘black boxes’ from which information can be gleaned to help prevent a repetition of mistakes.”
Tyrie originally wrote to Osborne in December last year, asking the ICSA to produce guidance on when it is appropriate to record director dissent or disagreement during a board meeting.
However, in his latest correspondence, Tyrie said the revised guidance submitted by the ICSA had failed to reflect the committee’s concerns. In particular, Tyrie said the reworked guidance on dissent did not reflect the “radically changed circumstances of the last 10 years”.
“Among other things, the minutes should record areas of substantive disagreement among directors. ICSA’s revised guidance on minute taking has been written as if the second worst banking failure in British history never happened,” Tyrie added.
“The current practice, which requires a director to ask that his or her dissent be noted before it is included in the minutes, is flawed. It sets too high a bar for the inclusion of what may be the most important element of a board discussion. It may also give a misleading representation of the tone of a meeting.
“In the first instance, it should be ICSA’s job to sort this out. So I’ve written again to Simon Osborne, suggesting that they think again on this point.”