Legal & General has dramatically raised the stakes in its dispute with Marks & Spencer. For any mainstream institution to issue a public statement criticising a listed company is unusual. To do it twice is rarer still and underlines how unamused L&G is.

If anything, the row is rising higher up the L&G hierarchy, with Peter Chambers, the fund management chief lambasting the M&S board. He also appears to be hardening his position, arguing that the “comply or explain” regime governing boardroom rules is too lax for the biggest blue chips and they should comply, full stop.

It is hard to see how this row can be resolved without someone being badly bruised. One outcome is for M&S to yield and change its mind about giving Sir Stuart Rose extra powers in the role of executive chairman. But it looks unlikely that he would stay on in those circumstances, so M&S would be confronted with an immediate succession problem rather than one in two or three years’ time. If the retailer stands firm and refuses to be budged, then L&G is going to look snubbed.

For one of the largest investors in UK plc to have two fingers held up at it – which is what it will seem like if M&S digs in its heels – looks unhealthy. If a blue-chip institution with £300 billion of firepower and millions of end-using investors isn’t listened to, there appears to be something seriously wonky with the accountability of listed companies.

As an index investor, L&G has no choice but to hold M&S shares, £300 million-worth in fact, and, indeed, every constituent in the FTSE 100. It cannot simply vote with its feet and sell the shares. So it is quite right that it pushes for what it sees as good boardroom standards. The Association of British Insurers could yet act as a lightning rod for a wider revolt.

Events at HSBC and ITV show how “code creep” is setting in, with more companies choosing to breach best practice. L&G may be right to draw a line in the sand and say enough and no further. It has merely chosen a particularly awkward case over which to make its stand.

patrick.hosking@thetimes.co.uk

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