The head of the country’s accounting watchdog has said the agency must regulate in a manner that has “a net benefit for UK PLC”.
The chief executive of the Financial Reporting Council (FRC) made the remarks as he discussed a number of ongoing reviews and his broad plans to turn the accounting agency into a “more strategic” and “relevant” organisation.
“I’m keen to stand back and ask ourselves, ‘actually, is the stock of regulation we’ve got here in the right place?’,” Richard Moriarty told the Following the Rules podcast. “Regulation must not be seen as a one-way ratchet.”
Moriarty, who took over from Jon Thompson last year, said: “I hope people will start to see the FRC as a more engaging, open, accessible, responsive organisation.”
He added, however, that this “doesn’t mean we’re always going to agree because that’s the nature of regulation. It can never be a popularity contest, but I’m very keen that we’re engaging.”
“I hope people will also see that increasingly the FRC will not be seen as a series of subject matter specialisms, but [as] a much more strategic and joined up holistic organisation and one that’s much more relevant and adding value to the public interest and supporting growth and competitiveness.”
Signalling his priorities for the months ahead, Moriarty said he wanted to “establish a clear direction” for the FRC, given the delays to the long-promised legislation to bolster its powers.
“It’s really important that we don’t get distracted by this,” he said, referring to many of the plans for the agency that were ditched last year. “We’ve got an important job to underpin market confidence and investment in the UK and it’s really important that we carry on with that important day job.”
Moriarty, who was previously the head of the Civil Aviation Authority, said the agency has got a number of reviews ongoing at the moment, including a review of its stewardship code to “ensure it supports growth and UK competitiveness”, according to an announcement at the time.
“We’re minimising burdens on business and actually there’s a net benefit for UK PLC in doing so,” he said.
He also said he is working on positioning the agency for “some tectonic plates might shift in the future”, such as artificial intelligence. “It’s been quite a busy first six months.”
Moriarty’s comments come after business secretary Kemi Badenoch changed the remit of the FRC in November to force it to embed growth and competitiveness within its objectives. Similar changes had already been put in place at the Financial Conduct Authority (FCA) and Prudential Regulation Authority.
In recent weeks, the FCA has been reminded of this new objective amid an ongoing City spat over the regulator’s plans to ‘name and shame’ companies it is investigating more frequently and at an earlier stage.
In a major intervention in the brewing row, Chancellor Jeremy Hunt said last week: “Last year the law changed in the financial services market and [the FCA] have a secondary growth duty. On the basis of that, I hope they re-look at their ‘naming and shaming’ decision because it doesn’t feel consistent with that new secondary growth duty that they have.”