NAPF turns on Higgs' critics

The powerful National Association of Pension Funds yesterday threw its weight behind Derek Higgs' review of British boardrooms, arguing it would boost corporate governance standards in the UK.

Christine Farnish, chief executive of the NAPF, backed Mr Higgs' idea that if companies breach the code they could have to explain why to shareholders.

"It is a very good principle and we will expect a bit more transparency," Ms Farnish said.

The NAPF waded into the debate about the Higgs review after days of company bosses taking pot-shots at the recommendations, which are due to become part of the Combined Code in July.

Concerns have centred on the potential for undermining the role of the chairman to fears that companies would have to remove many of their existing non-executives and not be able to replace them.

Ms Farnish dismissed both charges, saying: "I meet people everyday who would be very good non-executives but who at the moment do not think they are given the opportunity. I don't see any problem with the role of the chairman, as long as everyone's roles are clearly defined."

The Association of British Insurers also affirmed its support for most aspects of Mr Higgs' review, which was commissioned by the Government to find ways to boost the role of the non-executive director in a bid to avoid Enron-style corporate scandals in the UK.

Both bodies were keen to convey they would not encourage their members to crucify companies that chose not to comply with Higgs, as long as they could justify their decisions.

Ms Farnish said companies just ticking the boxes off in order to comply would be "disastrous". "We need an intelligent, thoughtful and pragmatic application of Higgs," she said.

Peter Montagnon, head of investment affairs at the ABI, said: "It does imply profound change, which will happen over time and needs to be handled with care to ensure it is productive."