A “root and branch review” of the UK’s accounting and finance regulator is to be led by former Treasury head Sir John Kingman.
The Financial Reporting Council (FRC) will have its governance, impact and powers assessed during 2018, following a series of criticisms about its performance.
Its role in overseeing top accountants and auditors has faced intense scrutiny post-banking crisis, with KPMG cleared by the FRC from requiring a tribunal for its role as auditor of collapsed bank HBOS.
Most recently, MPs have questioned the regulatory regime in light of “clean bills of health” for Carillion by accounting advisers prior to its collapse.
The independent review, to be completed by the end of 2018, will include a consultation asking about the FRC’s role in the British economy. Sir John Kingman, leading the review, is current group chairman of Legal and General. He was permanent secretary to HM Treasury, along with a number of other public and private roles.
Continuing high standards
Business secretary Greg Clark said: “The UK has a strong reputation as a dependable place to do business but this needs to be continuously updated and it’s important to ensure all of our regulators continue to drive high standards.
“This review is part of the government’s industrial strategy aim of creating a business environment that ensures our regulators are fit for the future and our markets are working for consumers.”
FRC CEO Stephen Haddrill has called for an extension of its powers to encompass all directors, and has increased its maximum fine level to £10m. It is also running a number of reviews and updates of the UK Corporate Governance Code.
Its chair Sir Win Bischoff said the FRC welcomes the review and looks forward to “contributing positively” to it.
“Meeting public expectations means using our powers effectively, working closely with other regulators and identifying where gaps in those powers exist,” said Sir Win. “The review will ensure we are best placed to support UK efforts to attract investment in business for the long term.”