The Committee is seeking evidence on the structure and composition of boards, the type of corporate culture that financial services firms should seek to encourage and the impact previous reviews and regulatory developments have had on the sector.
Chairman Andrew Tyrie said that the corporate governance arrangements of what the Committee is calling 'systemically important financial institutions' was of "crucial" public and Parliamentary importance due to the impact publically-funded bailouts of major banks had had on the taxpayer.
"The Committee will seek to address, among other things, why it was that so many experienced and technically competent non-executives - the cream of British corporate life - appeared to be asleep in some of the boardrooms of our major financial firms," he said.
It will also pay particular attention to the role shareholders, who have "shared the blame and the losses" attributed to banks as a result of the 2008 financial crisis, play in the corporate structure, he said. The Government is currently consulting on plans to allow shareholders a binding vote on executive salaries.
"In systemically risky institutions, it is particularly important to find a way to encourage more constructive engagement with shareholders on crucial governance issues, including risk and remuneration," he said. "We will look at whether, and if so how, they can and should do more."
Tyrie added that the UK would "benefit by taking a lead on improving" corporate governance, as the global financial marketplace would "locate to places with high quality" management structures.
However corporate governance expert Martin Webster of Pinsent Masons, the law firm behind Out-Law.com, questioned the need for the review.
"The Treasury Select Committee is proposing to look at areas which have been thoroughly reviewed several times over in the last few years – by the Walker Review, Financial Services Authority, Financial Reporting Council, Department for Business, Innovation and Skills and so on. I am not sure what good this prospect of further change will do," he said. "What companies need is a period of certainty, free from political interference, when they can bed down changes already made."
Among the questions posed by the Committee are whether UK financial institutions should consider adopting "alternatives" to the traditional unitary board structure, and whether a more intrusive system of financial services regulation would complement or substitute effective corporate governance. It also asks whether non-executive directors should bear greater personal responsibility for failure than they do currently, and whether directors with companies in the FTSE 100 list of leading companies by share capital should be allowed to hold non-executive positions on multiple boards.
The inquiry will also consider whether any benefits come from EU regulatory engagement on corporate governance issues, and the impact proposals by the Independent Commission on Banking (ICB) to separate the customer-facing activities of banks from their commercial and investment activities. In its final report, published last September, the ICB recommended that retail banking activities should be provided by a separate subsidiary of a wider banking group which should be "legally, economically and operationally" distinct from the group's investment banking activities. The Chancellor has already indicated that he will legislate for the majority of the ICB's recommendations before the end of the current Parliamentary session.