The UK Financial Reporting Council (FRC) held its annual stakeholder meeting in London yesterday, in which chairman Baroness Hogg stressed the regulator’s mission is to lay down the objective of fostering investment, in particular ensuring that the market for risk capital functions well.
At the stakeholders meeting, the equivalent of an AGM in a public company, the FRC presented its first annual report since the reform process that brought together eight different bodies under the FRC’s sole authority.
Hogg said that the new structure has resulted in an organisation where "the whole is greater than the parts" and that the annual meeting was both an opportunity to engage with stakeholders and a challenge to demonstrate the benefits of the FRC as a "grown-up" regulator.
"The FRC does not operate solely to keep accountants, auditors and actuaries in order… Our primary task is to help capital markets operate effectively… Now, you know better than I do that investors can’t ever place their money at risk without risk – but there ought to be a place with reasonable confidence where risk is managed as well as it can be," Hogg said.
Hogg explained capital markets need four main requirements to meet investors’ needs. First, effective boards who communicate well. Secondly, useful annual reports and accounts. Thirdly, robust and easily comparable standards. Fourthly, effective audit and actuarial standards.
This was the last annual meeting with Hogg as chairman of the FRC as she will be standing down once the Department for Business, Innovation and Skills identifies a successor by the end of the year.
Hogg left stakeholders with a final thought, quoting a line from the very first report of the FRC published in 1991, its first year of existence.
"Effective working of financial markets turns upon excellence in financial reporting," the first report stated.
Hogg added: "What stayed relevant more than 20 year ago, remains as relevant today. Markets in need of investors, good governance and robust financial reporting, remain important to the effective movement of capital between investors and the companies they invest in."
The UK Financial Reporting Council