VINCE Cable, the secretary of state for business, innovation and skills, announced a consultation on corporate transparency in a speech at the London Stock Exchange yesterday.
The business secretary, who was speaking at a conference organised by think tank Reform, said that trust in finance had declined over recent years. “Historically speaking, banks were highly trusted institutions”, he said. “It was considered to be a privilege to open a bank account. We’ve come a long way from then”.
But Eversheds, the international law firm, slammed Cable’s announcement. Richard Lewis commented: “Many businesses are likely to view this proposed system as akin to using a sledgehammer to crack a nut”.
Cable unveiled suggestions which some groups think may be off-putting to firms. “The last thing we want is for honest directors to fear sanctions”, Cable said. “We do need to make a distinction with the rogues, and that’s often what they are”.
Despite such assurances, the Confederation of British Industry (CBI) was critical of the approach. Katja Hall, CBI policy director, said: “There are already tough criminal sanctions for those who engage in fraudulent behaviour”.
She added: “The priority should be enforcing laws which already exist, rather than introducing a raft of new bureaucracy”.
The Institute of Directors’ Simon Walker also questioned parts of the consultation. “It is essential that the government does not impose significant new cost and regulatory burdens on the overwhelming majority of law-abiding small companies”.
On insolvencies, Andrew Tate of the R3 group added: “We would not support proposals to abolish the pre-pack system and we think taking away the ability to undertake pre-packs would undermine the UK insolvency system’s good standing”.