Listing agency will make FRC yet more powerful
The Financial Services Authority will not only lose bank supervision under the government’s shake-up of regulation, it is likely to lose its role monitoring listed companies. And the winner will be the Financial Reporting Council, making this little-known body the country’s most powerful corporate regulator.
The UK Listing Authority may not be the most exciting agency in the regulatory framework but it is one that every quoted company rubs up against. Whether it comes under the umbrella of the FSA, as at present, or the FRC may matter little, except that it will add a new wing to a body about which few know much.
The FSA and its chairman – and its failings - are well known and answer to not only parliament but the public at an annual meeting. The Financial Reporting Council enjoys none of the high profile of the FSA and little of the scrutiny from press, politicians or public.
Yet the FRC dictates most aspects of corporate life. Already under its umbrella are the Accounting Standards Board which dictates how items are treated in accounts, and the Auditing Practices Board plus the Board for Actuarial Standards. It is also the body that disciplines auditors and accountants. In there too is the Professional Oversight Board and the Audit Inspection Unit. Plus the Financial Reporting Review Panel. And it is the FRC that writes and reviews the Corporate Governance Code and the new Stewardship Code for investors.
If the government decides to move UKLA to sit under the FRC parasol too – it is on the ministerial agenda – then FRC’s power base will be wider still. Officially, no decision has been made but only because ministers intend to hold a consultation before doing what they clearly want to do.
FRC grew under the chairmanship of businessman Sir Christopher Hogg who this year handed over to Lady (Sarah) Hogg – no relation – the economist, commentator and serial non-executive director. Its new chief executive is Stephen Haddrill, who joined from the Association of British Insurers.
All perfectly sound people, but if the government is to allow their empire to be enlarged still further with the bolt-on of the UKLA, then perhaps the quid pro quo should be that FRC devotes rather more if its time to its own accountability and raises its profile so that this powerful independent regulator receives the same scrutiny as the FSA has been subject to.
