Endless Brexit uncertainty was always going to be bad for corporate governance in the United Kingdom. But on one level, it seems it can be big business. The Financial Times reports that asset managers have paid UK politicians an awful lot of money for speeches and advice over the past year, to help with investment decisions.
We are more than half way into January, and when it comes to politics, the New Year feels very much like the old one. Facing multiple challenges around technological transformation, skills shortages and changing consumer aspirations, much of British business has been tearing its hair out on the uncertainty around Brexit for over two years. During that period the UK government has, in its pursuit of best practice and the lure of Britain for business and investment, taken many steps to raise the bar on corporate governance.
This is the new mantra, aimed at British business and being chanted at it from all directions: ‘Action, Not Words’ (as noted in the last Governance Watch) when it comes to gender progression, ethnic representation and inclusion.
The consultation period for the independent review led by Sir John Kingman into the Financial Reporting Council (FRC), the UK’s accounting regulator and corporate governance watchdog, has just closed. It is intended to help ensure that the FRC’s role and powers are fit for the future and has come after years of accountancy in the media headlines for all the wrong reasons.
There’s a limit, surely, to how often you can plead an exception to the rule when assessing whether something is fit for purpose. When the ‘rule’: in this case, ‘best practice’ in the running a UK listed business adhering to highly esteemed standards of corporate governance, appears to have been ignored more than once within a few years, it’s time to re-think the components of that best practice.
The accuracy of the numbers in company reports lies at the heart of the corporate governance of any business. Institutional investors and shareholders burnt by unexpected company revelations will have welcomed the news that the UK government has just launched an independent review of the accountancy watchdog the Financial Reporting Council (FRC), to be completed by the end of the year.
It is a little difficult to consider something to be a ‘radical’ idea when it was first proposed seven years ago, in the immediate shadow of the financial crisis – to no avail. A snapshot of business media headlines cast a light on some of the complexities as well as the powerful forces at work that can prevent truly radical ideas from becoming reality.
