FRC highlights four "significant synergies" if handed UKLA

The Financial Reporting Council (FRC) has outlined a set of key “synergies” if it is forced to absorb the UK Listing Authority (UKLA) under a proposed shake up of city regulation in the wake of the crisis.

However, the FRC has said again that it was the government’s idea – and not its own – to reshuffle the UK’s key regulatory bodies.

“The proposal to bring the two closer together has come from the Government, not the FRC,” said Baroness Hogg, chairman of the Financial Reporting Council (FRC).

“We responded positively in the light of the synergies illustrated here, but continued to point out that there are arguments on both sides.”

The comments expand upon previous remarks by Lady Hogg, made to Accountancy Age last month.

The FRC has highlighted four “significant synergies” across its operating bodies which may work well with functions currently performed by the UKLA. These include:

– The Accounting Standards Board, which provides guidance on narrative reporting in annual reports, which may correlate with the UKLA’s guidance on narrative reporting in listing documents;

– The Financial Reporting Review Panel (FRRP), which enforces narrative reporting in annual reports, could work with the UKLA’s enforcement of narrative reporting in listing documents;

– The Auditing Practices Board, which provides guidance on the role of auditors in relation to listing documents, which are then relied upon by the UKLA in assessing suitability for listing; and

– The FRC’s publishes the UK Corporate Governance, which correlates with the UKLA’s monitoring of governance and financial information of companies seeking to raise capital in the market.

Hogg said: “Whatever ministers finally decide to do in reforming the regulatory architecture, the key requirement is that all parts learn to work closer together.”

“I welcome the focus on the FRC’s work in promoting high quality corporate governance and performance, which are crucial to the health of the market”.

The comments come a day after the London Stock Exchange, which is campaigning against the government changes, said synergies between the work of the FRRP and the UKLA were “not substantive”.

The LSE wants the UKLA to be absorbed within the proposed Consumer Protection and Markets Authority (CPMA).

“There are greater and more natural syngergies with the markets division of the new CPMA,” said Lucy Leroy, head of UK primary market regulation at the LSE.

Further reading:

LSE refutes Hogg’s claims UKLA move will create “synergies”

FRC chief lends support to proposed UKLA move

A new approach to financial regulation: judgement, focus and stability