Legal & General group chairman Jon Kingman, who led the review into the UK’s Financial Reporting Council (FRC), has expressed his concern to the government of ‘letting the FRC drift on’.
In a letter sent to Business, Energy and Industrial Strategy Committee (BEIS) select committee chair Rachel Reeves, he noted there is a risk that the FRC may only be ‘half reformed and lacking the teeth that only legislation can give it’.
While noting that the UK government has many ‘competing priorities’ currently, he expressed his disappointment that legislation to put the new regulator on a proper statutory base and to give it additional powers it needs to do its job was not mentioned in the Queen’s Speech on Monday. The Queen’s Speech is the formal process of opening a parliamentary session in the UK which sets out the government’s priorities.
While expressing his concerns, he also noted that significant progress had been made by the FRC and the government and gave his approval of the new chair and chief executive of the FRC who took up their roles last week.
Kingman led the review into the FRC following the collapse of the construction company Carillion, which brought much public and political scrutiny to the audit profession and the FRC, to see if it was still fit for purpose.
His review found that it was no longer fit for purpose and that it should be replace by a new regulator known as the Audit, Reporting and Governance Authority (ARGA) which would be given greater powers to regulate the audit industry in the UK.
He also suggested that while the FRC transitions into ARGA it should it implement aspects of the transition which can be undertaken or initiated in advance of legislation.