The Association of British Insurers (ABI) is sending out a warning to UK companies that breach corporate governance rules by appointing the chief executive as chairman. HSBC and financial advisory firm Close Brothers will be the first to receive investor alerts.
The trade body plans to send amber top alerts to investors in the companies, warning them to scrutinize the move to appoint the former chief executive to the role as chairman. Close Brothers appointed former CEO Rod Kent as chairman recently and HSBC chief executive Stephen Green is due to become chairman in May when Sir John Bond retires.
The Combined Code, introduced as a set of City guidelines in 2003, states that companies should not promote chief executives to the chairmanship unless they have special reasons. There is a concern that a former chief executive would not question strategies they put into place. The ABI is concerned that companies break the rules frequently and will now send out a warning in each case.