Craig Swan, the chief executive of the Bermuda Monetary Authority, is sending a clear message: board accountability is no longer optional.

Using the collapse of Halifax Bank of Scotland in 2008 as a cautionary tale, Mr Swan highlighted how even major institutions can crumble under weak leadership.

“By 2008, HBOS was the fifth largest bank in the United Kingdom, with 22 million customers and assets exceeding £667 billion [about $904 billion],” he said during the Institute of Directors workshop on board effectiveness held at the Hamilton Princess & Beach Club last week. The bank’s fall exposed critical lapses at the top.

The BMA has taken concrete steps to enforce director responsibility in Bermuda.

“In 2022, the BMA issued a prohibition order regarding a former director because that director deliberately provided the BMA with false and misleading information,” Mr Swan explained. The penalty was severe: a lifetime ban from serving as an owner, director or senior executive in a BMA-regulated entity.

Mr Swan laid out six pillars of sound corporate governance boards must follow: composition, culture, conflict, challenge, custodial responsibilities and compensation. “A board must have a diversity of thoughts,” he emphasised. “A board is like a parachute. When the parachute is open, it works. When boards are open, when board members feel comfortable to express their views and disagree, boards work.”

The BMA’s 2025 business plan signals an even more aggressive approach to enforcing good governance. “We have an initiative commencing with the commercial insurance sector ... with the aim of clarifying the BMA’s expectations for directors,” Mr Swan said.

Stakeholders will have a chance to contribute through consultation, he added.

Mr Swan closed with a reminder of the weight of board responsibilities. “As directors, you are serving in a critical function of making dreams come true,” he said. “The company for which you are a director was born out of entrepreneurial dreams, and your level of diligence in your responsibility will largely determine how successful that company will be.”