The Prime Minister has been urged by 66 MPs and Lords in a cross-party alliance to prioritise the long-overdue Audit Reform and Corporate Governance Bill that was promised last year.
In the King’s Speech in July 2024, the newly elected Labour government unshelved the Bill that would reform the Financial Reporting Council (FRC) into a new regulator.
The return of the Bill had been on the cards since it was shelved by the previous government in November 2023 in order to focus on “growth and the UK’s competitiveness”.
The push for a new watchdog came after numerous high-profile scandals, including the collapse of big companies such as BHS.
The new regulator would see changes to its powers to investigate and sanction company directors for serious failures in their financial reporting and audit responsibilities. This means directors will face consequences for presenting any dishonest accounts.
The Bill would alap extend Public Interest Entity (PIE) status to the largest private companies, ensuring that the audits of these businesses are of high quality and provide early warning of financial problems. It will also remove “unnecessary rules” on PIEs.
However, since the Bill was unshelved, there has been no movement on it, which has resulted in over 60 Parliamentarians calling the stalling of the Bill very disappointing.
The Chartered Institute of Internal Auditors coordinated a cross-party letter to Kier Starmer, urging that the “case for reform is now more pressing than ever.”
The MPs include Labour’s Clive Betts MP, Tories Sir Geoffrey Clifton-Brown MP, Liberal Democrats’ Daisy Cooper MP, and the Greens’ Siân Berry MP.
The letter stated, “It is deeply concerning that over seven years have passed since the collapse of Carillion, yet no legislation has been brought forward, despite multiple independent reviews, a Government White Paper, and extensive public consultation.”
“In the meantime, we have witnessed further high-profile corporate failures linked to weaknesses in audit and governance, including Patisserie Valerie, Bulb, Thomas Cook, Wilko, and ISG, making it clear that market oversight remains far from adequate.”
The politicians stated that when companies collapse due to audit and governance failings, the consequences are devastating, as they impact jobs, pensions, and smaller businesses across supply chains.
“This is the polar opposite of economic growth,” the letter warned.
Stamer was reminded that the Audit Reform and Corporate Governance Bill “enjoys strong cross-party support”, as the politicians urged the government “to act now, bring forward this long-overdue legislation, and prioritise its passage through Parliament.”
This comes after Starmer had to sack his first batch of ministers on Friday in a major reshuffle of his top team after Angela Rayner’s dramatic resignation following her tax scandal last week.