20 July 2009
Letter from Stuart Fraser to The Evening Standard about the
Walker Report
Editor -
Efforts like the Walker report’s to learn from what
went badly wrong and to improve things are welcome and I
encourage the industry to give detailed comments so we get the
right outcome: that the City remains (and is seen to be) a high
quality business environment, with the good governance framework to
match.
However, while the Walker report is carefully worded, we need to
beware of some false and simplistic ‘solutions’ found
elsewhere.
Firstly, we need to avoid equating high pay per se with high
risks. It all depends on the behaviour incentivised and that’s a
Board responsibility.
We also need to avoid applying the sort of heavy regulation
needed for systemically critical firms to ordinary firms that are
not backed by the tax-payer and which, frankly, need to be exposed
to the Darwinian imperatives of failure and success.
Finally, while the tax-payer has a legitimate interest in some
firms – which it either owns or which are systemically important –
we need to allow the boards and shareholders of the others to be
free to reward their staff as they judge best. Otherwise
global talent will want to work elsewhere – and the rising centres
in Asia and elsewhere will gain and the UK and Europe as a whole
will lose out.
Stuart Fraser
Policy Chairman
City of London Corporation