INVESTMENT FUND directors can earn in excess of €1 million in fees, according to a corporate governance expert.

In a submission to the Financial Regulator, Prof Niamh Brennan said there was anecdotal evidence that certain individuals hold so many directorships of investment funds that their remuneration can top €1 million, a practice she criticised as “risky”.

Prof Brennan, who is a management professor in the UCD Centre for Corporate Governance, was responding to corporate governance proposals published by the Financial Regulator. She welcomed the proposed limitations on the number of directorships that an individual can hold.

Although the new proposals are specifically targeted at banks and insurance companies, stockbroking firm Davy has asked the regulator not to extend the rules to investment firms. Many such firms in Ireland are owner-managed, it said in a submission.

Given that the livelihood of the owners depends on the “proper management” of their firm, risk management is always a significant focal point, it said.

It also argued that, unlike banks, investment firms are not of systemic importance to the functioning of the wider financial system, and therefore should not be subject to the new proposals.

In a separate submission, subprime lender Stepstone Mortgage Funding warned that any “radical change” to its structure resulting from new corporate governance requirements could threaten the level of support it provides to customers across Ireland.

The firm requested an exemption from the proposed cap on any one individual’s directorships, saying that such a limitation would make it difficult to retain directors with sufficient experience.

Stepstone’s balance sheet is insolvent and its directors intend to “run off” its mortgage book in an orderly manner and not engage in new lending. Its immediate parent in the UK is in administration and its ultimate parent is Lehman Brothers, which went bankrupt in September 2008.

At that point, Stepstone had extended approximately 850 mortgages in Ireland, totalling about €180 million. In recent months, Stepstone has been granted a number of court orders to repossess properties in Ireland.

Meanwhile, the Irish Bank Officials Association (IBOA) called for mandatory consumer and employee representation on bank boards. Mechanisms must also be put in place to enable employees to report risks and abuses without fear of retaliation.

“Consumers have recourse to the Financial Services Ombudsman, but employees are still waiting for whistle-blowing legislation,” it said.

Prof Brennan said that current whistle-blowing policies clearly do not work.