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Corporate governance: Banks must ditch siege mentality

Leading investor says finance industry must generate change within.

By Charles Hardwick

With the financial system beginning to return to some semblance of stability, the task now for many in the markets is to ensure that the recent financial crisis is never repeated.

Paul Lee, a director at Hermes Equity Ownership Services, a market leader on the subject of corporate governance, has clear views on who should be responsible for the shake-up in the financial sector. “Let’s see the industry get on the front foot,” he says. “We want change to be from the industry rather than regulatory.” Although he admits that regulations were not up to scratch before, and that the new accounting standards will be helpful, if the financial services industry wants to return to its former glory, the onus is on itself to come up with a solution.

“The banking industry is pretty beleaguered,” Lee says. “It’s not got many friends among the politicians, it’s not got any friends among the general public, and yet, it seems to have a siege mentality – it’s all alright, it’s all fine, we can just carry on regardless – and we think that is the wrong attitude.”

The problem is that nobody wants to go first.

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