The UK’s governance watchdog has responded to criticism of its response to the collapse of retailer BHS, saying it can only investigate accountants, auditors and actuaries.
A letter from the Financial Reporting Council (FRC) addressed to Simon Walker, director general of the Institute of Directors (IoD), confirms the regulator is looking into whether any members of the professions it supervises were involved in failures of professional conduct.
Stephen Haddrill, chief executive of the FRC, said: “We are looking into the events at BHS to determine whether there are grounds to investigate under our enforcement arrangements.”
Haddrill points out that the FRC has no jurisdiction over law firms.
The FRC came under the spotlight last week when the IoD’s Walker levelled criticism at regulators as well as those running BHS.
In his own letter to a parliamentary committee looking into what happened at the retailer, Walker said: “The corporate governance at Arcadia, and the collective failure of regulators, trustees, and advisors, represents a blight on the reputation of British business.”
Walker asked who could investigate “individual directors” associated with BHS after appearing to understand the FRC could do nothing.
In today’s letter the FRC clarifies that they can investigate individuals if they are members of the professions under its jurisdiction and members of a “relevant professional” body.
Haddrill adds: “Should our enquiries lead us to open an investigation into events at BHS we would normally announce that publicly.”
His letter also notes that only listed companies are subject to the UK’s corporate governance code and that FRC has no powers to enforce legislation in the Companies Act.