Margareta Pagano: Dear Sir David ... the only code our boardrooms need is a code of honour

Britain's boardrooms will soon have as many codes to break as GCHQ.

Each time there is a corporate crisis, the government of the day appoints a distinguished industrialist or financier to clean up the mess and come up with clever new ways of doing business. Thus, over the past decade or so, we have had codes from Hempel, Greenbury, Cadbury and Higgs; all very thoughtful people in their own right but who, once they get snared by government, suddenly believe that they have to reform the universe.

In this way we have had a raft of fancy new rules, many of which have been quietly dropped or ignored; and even sillier concepts such as the "comply or explain" box-ticking devised by the late Sir Derek Higgs, which is now unravelling as the governance row at Marks & Spencer and the board succession at HSBC have shown. In the case of HSBC, the board ignored the advice of Higgs, which stated that a chief executive should not step up to being the chair, and HSBC now has a hugely successful chairman in Stephen Green, the former chief executive.

But the real danger from these new codes is that the more we have, the more the norm by which people operate is lowered; codes rarely allow for honourable people to behave honourably.

This is why I am nervous about much of what Sir David Walker has to say in his review, published last week, into improving the corporate governance of our banks.

Some of his ideas are excellent: a new risk committee, strengthening the chairman's role, suggesting that non-executive directors spend more time with their company and that remuneration committees look at the pay structure throughout a financial institution – are all to be highly commended. Other bits are too prescriptive – in particular, the notion that NEDs should have more qualifications – while his proposals to strengthen shareholder engagement with the boards of the companies in which they invest could become too bureaucratic and, I fear, unworkable. More of that later.

What I wanted to know the most from Sir David himself is whether he thinks Britain's banking disasters would have been prevented if his 39 steps had been in force. Rather bravely, I thought, Sir David tells me that he hopes so, mainly because of the three key weapons he proposes – the new risk committee, changes to boardroom culture, and the new levers for shareholders to be more active. It's easy with hindsight to hope, but would these new teeth really have given the board the courage to stand up to RBS's Sir Fred Goodwin, who ran his fiefdom like the Kremlin, and question the ABN Amro deal? Or, put another way, if the proposals had been in force, would they have made NEDs so terrified about doing deals that they would have stopped him from taking over NatWest, which was generally considered a good deal? Would a tougher risk committee really have stopped Lord Stevenson and Andy Hornby, chairman and chief executive of HBOS, from expanding market share at any price? In fact, their actions were questioned by the risk officer – and he was sacked.

Although the public and the Government have chosen to concentrate on sky-high City pay as the reason for the crash, pay and bonuses are the red herrings in this drama. The real cause was over-arching ambition, bad management, appalling risk assessment on the part of the executives, combined with laziness on the part of the NEDs. As for many of the UK's biggest investors, they abrogated their responsibility to challenge the boards either on strategy – in the case of RBS, why was it buying ABN? – or to question pay levels because, so long as the share price was rising, they were happy to sit by and watch. How do you dream up a code to change that?

Let's be frank about Sir David's remit: this was a political exercise and last week he delivered the political response that the politicians wanted; headlines which screamed "Pay of top City bankers to be made public", and "Dramatic overhaul of how banks are run".

By implication, these headlines seemed to say that by making pay transparent and public, huge bonuses will no longer be an issue, indeed, may even fall. His idea that those staff earning more than the median level of the executive directors should also be published is good – but doesn't go far enough. If the point of this is to show the outside world and shareholders which traders or originators are running the biggest risk, then to be effective the pay levels of a much larger number of people within that firm need to be provided – at least the top 20 earners. This will give shareholders and regulators a far better picture of where big leverage is being built up in the bank. However, you can bet that pay won't come down. Just take a look at what RBS or any of the other banks are paying their bankers right now.

I'm not suggesting that pay should come down – that's up to the shareholders to decide, as they are the ultimate owners. So the big question to ask is whether Walker's proposals will force the UK's big shareholders – and particularly the new breed of long-only funds, such as the sovereign wealth funds – to start behaving like responsible owners. His proposal that investors should register with the Financial Reporting Council to explain whether they are long-term holders or short-term "switchers" is fine in theory, but could be difficult to enforce.

We should be looking to Sweden for a few lessons on how a much healthier relationship has developed between boards and owners than the one we have in this country. Instead of the usual bun-fight of an annual meeting, boards meet with their four or five core, long-term shareholders regularly to talk about what the company is doing. These are lively and informative forums, giving investors the chance to evaluate the executives and the NEDs, as well as question them over strategy and performance.

Shareholders are also involved in choosing the NEDs, thus creating a much closer relationship between investors and the directors who are spending their money. For a supposed social-democratic, capitalist society, we do seem to be scared in the UK of letting shareholders behave as if they real do own the capital. Sir David tells me he looked at the Swedish model, one he admires, but says that our insider trading rules and other regulations would make it difficult to operate. But it would be a pity if the Swedish experience couldn't be looked at more closely over the next two months of the consultation process before Walker's final report in November.

If we really want to stop the sort of appalling strategic errors made by Britain's top bankers, then we have to have a punishment to fit the crime. We need teeth so draconian that the executives, and the NEDs, lose their jobs and, possibly, face criminal judgment if they muck up on the scale we have witnessed. We also need boards to stop being in thrall to the remuneration consultants who are so good at persuading the bankers – and companies – into paying more than they need. This doesn't need new legislation, just enforcing the existing laws.

Before Walker is set in stone, it's worth asking whether corporate Britain is run any better today than it was before the last crop of codes. There needs to be far more debate about this, particularly how to improve the relationships between companies and their owners; only then will we know whether Walker's report is a worthwhile exercise, or more sticking plaster. What boardrooms really want from Walker is a new code of honour rather than another code to be cracked in a few years time.