DISCUSSION First steps towards a wealth creation manifesto

Is the governance and proper conduct of our companies a priority for the UK government and Kwasi Kwarteng, the Business Secretary? It would appear that the answer is ‘no’.

The whole UK system of listed companies depends for its regulation on the workings of the Financial Reporting Council ( FRC). Mr Kwarteng and his department seem to be letting things drift. The FRC lost its chair in May 2020. The government has decided not to renew the terms of two of  its non-executive directors (NEDs) – both women, as it happens. With retirements the FRC will shortly be left with just three NEDs.  Its interim chair, Keith Skeoch, steps down in October and, the FT tells us, has warned in the FRC’s own annual report

“There is a grave risk, given recent experience, that these appointments will not be completed by the time myself and the other directors leave the board…..This will leave gaps in the governance structure and may create delay in the important board reform and transformation process underway until such time as the recruitment process is completed.”

This echoes criticism by Sir John Kingman, the man appointed by the government to make recommendations to improve the regulation of our companies and their governance. In accordance with Kingman’s recommendations, the FRC is due to be replaced in 2023 by a new, beefed-up body, called the Audit, Reporting and Governance Authority. Sir John has lost patience with that government.

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