Kingman: FRC should be replaced with new independent regulator

John Kingman’s recently published independent review of the FRC states that this new regulator should be named the Audit, Reporting and Governance Authority.

The "root and branch" review was commissioned by Greg Clark MP, secretary of state for business, energy and industrial Strategy.

The report said the new body should be accountable to parliament, with the chair and chief executive subject to a pre-approval hearing with the Business, Energy and Industrial Strategy Committee, and appearing annually in front of the select committee.

Kingman highlighted that the scrutiny of the FRC has revealed “an institution constructed in a different era – a rather ramshackle house, cobbled together with all sorts of extensions over time. The house is – just – serviceable, up to a point, but it leaks and creaks, sometimes badly. The inhabitants of the house have sought to patch and mend. But in the end, the house is built on weak foundations. It is time to build a new house.”

In recommendation 74 of the review, the report said the government, working with the Prudential Regulation Authority and the Pensions Regulator, should review what powers are required effectively to oversee regulation of the actuarial profession, as the present arrangements were unsatisfactory.

Commenting on the Kingman Review, Caroline Escott, policy lead on investment and stewardship at the Pensions and Lifetime Savings Association, said: “We hope the measures outlined in Kingman’s report will help ensure that a new body can work better towards the interests of investors."

Escott welcomed the review’s recognition that the FRC needs to develop deeper relationships with the investor community, but she said a key step in doing so would be to ensure that the FRC, or its successor body, employs more staff with investor practitioner experience and expertise.