The Government should change the law to make penalties for non-executives at failing companies much lighter than for their executive counterparts, said the leading body representing accountants in England and Wales.
The Institute of Chartered Accountants made the recommendation yesterday in its submission to the Government sponsored review into the role of non-executives by Derek Higgs, former chairman of UBS Warburg.
It said there has been a drop in talented people takingnon-executive posts because they risk being held personally liable for hidden problems.
Confidence among potential candidates has been particularly dented by the case of Equitable Life, where non-executives face financial ruin along with executive directors over decisions that led to the virtual collapse of the life assurer.
Peter Wyman, president of the Institute of Actuaries, said: "Non-executives have a colossal responsibility. For example Sir Roger Hurn faces lingering damage after spending a lifetime building up a fabulous reputation just because he happened to be chairman of Marconi at the wrong time."
Mr Wyman stressed he did not want to lighten the burden on directors who have been negligent, but said: "If the non-executive has done an honest job and asked questions, the degree of liability should be little or nothing."
Mr Higgs is canvassing opinion on the role of non-executives for Patricia Hewitt, the Trade and Industry Secretary. The Government is pressing for stricter scrutiny of managements to preventan Enron or WorldCom occurring in the UK.
Mr Wyman has suggested that as well as reforming joint liability, pay of non-executives could be boosted moderately to attract candidates.
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