The UK government has given the go ahead to the Financial Reporting Council (FRC) to reform its structure, following the output of a joint consultation.
The reform aims to simplify the regulator’s structure by consolidating its operating subsidiaries from seven down to two.
FRC chair Baroness Hogg said the regulator’s structure was “over-complicated” and the reform will enable it to mobilise its expertise to strengthen the UK’s voice internationally.
UK Business Minister Norman Lamb said by tightening FRC focus and streamlining its governance and structure, the regulator would become more effective.
“The FRC will continue this dialogue with stakeholders as the changes are implemented,” Lamb said.
- Proposed reforms, which are part of a wider UK regulatory framework, include:
- Delegating most statutory powers to the FRC board not the operating bodies;
- Providing the FRC board with powers to determine and require recognised supervisory bodies (RSBs) to impose sanctions for poor quality audit
- Providing the FRC board with powers to impose directions and financial penalties on the RSBs and recognised qualifying bodies for shortcomings in discharging their regulatory responsibilities in relation to the quality of auditing in the UK; and,
- Enabling the FRC to conclude disciplinary cases without a public hearing where all involved agree.
The UK regulatory body also made a series of senior appointments to comply with the part of the reform that does not need law changes, such as the grouping of activities around codes and standards, and conduct.
Jim Sutcliffe has been appointed as chairman of the new Codes and Standards Committee, which will include the areas covered by the board’s corporate governance committee such as the Accounting Standards Board, the Auditing Practices Board and the Board for Actuarial Standards.
Richard Fleck has been appointed chair of the Conduct Committee, which will encompass the areas covered by the Financial Reporting Review Panel, the Professional Oversight Board, the Audit Inspection Unit and the Accounting and Actuarial Disciplinary Board.