Comment: Awards triumph to public rebuke for SSE

TWO weeks ago, SSE boss Ian Marchant was being hailed as one of Scotland’s top businessmen after picking up an award from the Institute of Directors. He may be feeling a little less triumphant this morning.
Terry Murden. Picture: TSPLTerry Murden. Picture: TSPL
Terry Murden. Picture: TSPL

Marchant, who announced in January that he is stepping down as chief executive of the Perth-based energy company, was rewarded by the institute for a ten-year reign that has been remarkably successful, but which is ending on something of a sour note.

During that period, the company has doubled in size and customer accounts. SSE is one of just five FTSE 100 companies to have delivered a real dividend increase every year since 1999 and is ranked tenth in the index for total shareholder return over that period. There is no doubt that Marchant deserves credit for what he has achieved.

Hide Ad
Hide Ad

But the company he leads has received a second fine for misleading selling practices and has been forced into a humiliating public apology for cheating the consumer. Agents were supplied with misleading scripts and some consumers who thought they would achieve savings were being put on a worse deal.

Consumer groups have been having a field day with this one, accusing SSE of leaving a stain on the energy market.

Redress is now an issue and the government’s energy bill will enable fines imposed by regulators to find their way into the pockets of those directly affected.

The company has taken rigorous steps to improve its selling practices and bonuses were withheld for three directors last year. Compensation has been offered by the firm. But this is a black mark against one of Scotland’s biggest businesses.

Tough cultural issues for Barclays to debate

Sir David Walker admitted the report published yesterday into the culture of Barclays bank made for uncomfortable reading. The chairman put it mildly.

Anthony Salz, the lawyer who led the review in the aftermath of the Libor scandal, said some of the bank’s highly-paid staff thought they were effectively beyond the reach of the rulebook.

As such, he paints a picture of arrogance and reckless greed in an institution that became so big as to be unmanageable. But he also acknowledges the difficult challenges facing those charged with changing the bank’s practices.

Culture has been a central theme in the banking crisis and the trouble with culture is that it runs deep, particularly in organisations of this scale.

Hide Ad
Hide Ad

Making change more problematic is that the reckless targeting that led to ever-riskier practices in pursuit of profit and pay has been endemic in the sector and will be mightily hard to cut out.

But it is not just banks that are brazenly paying top dollar to executives. Standard Life unveiled a £10 million bounty for its top three directors this week even though the company has campaigned against excessive boardroom pay.

It is no wonder that there have been further calls for legislation to control remuneration at the top of British companies, though the European Commission has made a start on capping bonuses – which the British government opposed. That suggests little appetite in Westminster for a domestic response.

Twitter: @TerryMurden1

Related topics: