Follow TopicFollow Contributor Share Feedback
UK FRC Softens Governance Code

UK FRC Softens Governance Code

by Starling Insights

Starling Insights Editorial Board

Nov 17, 2023


In May, the UK Financial Reporting Council (FRC) launched a consultation on a revised Corporate Governance Code for the first time in five years.  The exercise aimed at bolstering board accountability and driving improvements to internal risk controls and other governance mechanisms.

However, citing the need to protect competitiveness, CEO Richard Moriarty has recently announced that the soon-to-be-released final version of the Code would drop over half of the 18 initially proposed reforms. The scrapped proposals include heightened diversity reporting requirements and new audit committee responsibilities for environmental, social, and governance (ESG) issues.

"The UK rightly enjoys a strong reputation for high governance standards but it's important that we don't burden our best and brightest companies to the extent that it's not a level playing field versus our international competitors,” Moriarty said.

The FRC's decision has been labeled "pragmatic and proportionate" by City Minister Andrew Griffith, emphasizing the importance of maintaining a level playing field with international competitors.

This move is seen as aligning with the UK government's aim to reduce red tape on businesses and bolster London's standing as a financial hub. However, some have criticized the softening of the proposed governance requirements. Roger Barker, Director of Policy and Governance at the Institute of Directors (IoD), said the FRC's decision was "the latest stage in the unraveling of the government's corporate governance reforms."

The FRC plans to publish an updated version of the Code, applicable to premium-listed companies, in January, delaying the implementation of internal controls reporting for an unspecified duration to differentiate from the more intrusive approach in the US.

Join The Discussion

See something that doesn't look quite right?

We strive to provide high quality and accurate content at all times. With that said, we realize that sometimes links break, new information becomes available, or there is something that you feel we may have missed.

If you see something that you think we should be aware of, we would love to hear from you. Feel free to drop us a note below and leave your name and contact info if you'd like to hear back from us.

Thank you for being a key part of the Starling Insights community!