“If you ask me someone should look into who’s been lobbying ministers over lunch of late, since the only people I can see to benefit here are the auditors themselves,” he said.
Tim Martin, chairman of JD Wetherspoon, said: “The problem with increasing the burden on directors – especially non-executives – is that it will make decision making ever more conservative. Business success needs a balance of honesty and entrepreneurialism. If you put the frighteners on boards you will discourage risk-taking: the Steve Jobs, Elon Musks and their ilk might avoid the UK.”
Veteran industrialist Sir John Parker, chairman of Pennon Group and Laing O’Rourke, said directors relied on others to help run their companies.
“At the end of the day boards are reliant on financial control people to bring things out on the table, that’s a practical thing. To single out one group of people around the boardroom table is unfair,” he said.
Imposing onerous liability on individual directors could discourage strong candidates from applying for roles, Sir John added. “The end result could be that people who would be good, sound directors making a decision not to be on boards.”
Paul Lynam, chief executive of Secure Trust Bank, said any changes must be proportionate.
“The UK doesn’t want to get into a situation where the regulators are so scary and severe that the only people willing to act as directors are the reckless types with very high personal risk appetites,” he warned.
The boss of one listed pub group said: “The current arrangements for non-executive directors in the UK in respect of time commitment, fees and the balance of risk and reward don’t appear compatible with what is proposed.”
Ministers hope that ensuring directors have “skin in the game” will improve financial reporting and controls.
Michael Izza, chief executive of accounting body the ICAEW, said making directors personally liable “is going to really focus the mind on being a director of a public interest entity, as it should”.