Cable plans tougher measures for failed company directors

Vince Cable will today announce plans to make businesses more transparent and accountable, including measures to make negligent directors pay creditors if their business fails.

The Business Secretary will announce proposals to boost transparency and trust in British business in a speech to the London Stock Exchange, with options for discussion including making errant bosses liable for losses and disqualifying directors who are already banned outside of the UK.

Cable will also suggest making the safety and stability of firms the main responsibility of bank directors - an idea suggested by the parliamentary commission on banking standards.

In an interview with The Sunday Telegraph, the Liberal Democrat warned that the failure to punish executives in the wake of the banking crisis had undermined public faith in regulation.

He said: "I think the public are a little baffled by the current regime. There is an issue around the people who used to run Lloyds and RBS, and there is a worry about how the system operates."

People who operate "rogue companies" or are involved in "serial failure" should be punished through disqualification, the Cabinet minister added.

However, he indicated that he wanted any new measures to be proportionate.

"We don't want to get into a situation where we're penalising good business people who take risks but whose business fails for whatever reason," he added.

Tougher rules are not expected to be retrospective, despite persistent calls for action against figures such as former RBS chief executive Fred Goodwin. There also appears little chance that final proposals will reach the statute books before the 2015 general election.

On transparency, Mr Cable is to moot ending 'concealed ownership' of companies, by requiring businesses to supply information on their owners and controlling shareholders.

This could mean scrapping bearer shares, which confer ownership without requiring the holder of the shares to be identified in public, and demanding more information about nominee directors.