Business groups are lobbying the Government to strengthen corporate governance rules for private firms in a bid to avoid scandals like the BHS collapse.

The Institute of Directors is calling for the ruling Conservative Party to adopt a new code of conduct after finding that two-thirds of company directors were in favour of reform.

The UK’s private companies are not currently held to the same set of standards as listed companies, but the Department for Business, Energy and Industrial Strategy is reviewing whether it should change that position.

The department’s corporate governance consultation closes for feedback today.

In its submission to the consultation, the IOD said: “Good governance is not only relevant for financial institutions and large listed companies.

“The IoD is convinced that appropriate corporate governance practices can contribute to the success of UK companies of all types and sizes, including those that are unlisted or privately held.”

“Held to a higher standard”

The British Bankers’ Association said in its submission: “While we should not lose sight of the fact that privately held business can be well-run organisations, BHS has shown that corporate failure on the part of privately held businesses with limited liability can have a significant effect on many people’s lives.

“We therefore see merit in their being held to a higher standard of corporate governance than currently exists based upon a combination of statutory requirement and the development of a suitably tailored code.”

BHS tumbled into administration last April, putting 11,000 jobs at risk and leaving a £571m black hole in its pension scheme.

Government statistics suggest there are around 2,500 private companies in the UK, as well as 90 limited liability partnerships.