The Kingman review of the Financial Reporting Council

In April 2018, the UK Secretary of State for Business, Energy and Industrial Strategy (BEIS), the Rt Hon Greg Clark MP, requested that Sir John Kingman undertake a “root and branch” independent review of the FRC including proposals to make the regulator “a beacon for the best in governance, transparency and independence”. The findings of the Kingman Review, published in December 2018, have been much reported in the UK news and accountancy press. Many readers will have heard that Sir John described the FRC as “a rather ramshackle house … [that] leaks and creaks, sometimes badly”. And, perhaps because the metaphor was too difficult to resist, the Review found that despite the efforts of its “inhabitants … to patch and mend … in the end, the house is built on weak foundations”. The Review concludes “it is time to build a new house” and, in its report of just under 100 pages, sets out no fewer than 83 recommendations for such a rebuild. The proposals are likely to have a profound effect, not only on the FRC itself, but also on its stakeholders. Furthermore, it is likely that governments and other financial regulators around the world will be watching to see what happens – which changes are made, which are not and how effective they become in practice. To the extent that the reforms succeed, they are likely to be replicated by others. This article begins the coverage of this important development by looking at the changes in store for investors and companies. The latter will be significantly affected.