Accountants have a new chief regulator in Stephen Haddrill. The current
director general of the Association of British Insurers begins his new post of
CEO at the Financial Reporting Council (FRC) in November. But what will life be
like with a new man in charge?
The current chief executive of the FRC, Paul Boyle, announced his resignation
in January after almost five years heading up the regulator that looks at the
professional conduct of accountants, the quality of audit and financial
He came to head a revamped regulator with a clear agenda how do you get
another firm to enter the global audit market currently dominated by the Big
This was a pressing concern because the Enron crisis, just two years before,
had seen the demise of Andersen, raising fears that the collapse of another big
firm would see epic-sized conflicts of interest crop up across the world.
What happens next?
Formerly a career civil servant and a professional regulator, Haddrill is no
stranger to the FRC. Indeed, he can lay claim to being one of the ‘three wise
men’, alongside Sir Bryan Nicholson and Peter Wyman, who put together the
current structure for the regulator. He then supervised its creation while
serving as head of the Fair Markets Group at the department of trade.
He is viewed as an intelligent and considered man by those who work with him.
As a member of the financial crisis group at the International Accounting
Standards Board, he is viewed as one of its leading lights.
That said, he is not shy of making his views public. While a staunch
supporter of the IASB, and campaigns to see it established in law, he’s also on
record saying it hasn’t placed the ‘investor’ wholly at the centre of its work.
And investors are where it’s at for Haddrill. At the moment.That was made
clear by FRC chairman Sir Christopher Hogg, who said the ABI man would bring a
‘strong’ investor perspective to his job. If that’s important enough for the
chairman to mention it must leave the big audit firms asking where Haddrill will
stand on issues like more legal protection for auditors and audit independence.
An emphasis on the concerns of investors could mean he has less sympathy with
the difficulties facing auditors. The Treasury select committee recently asked
the FRC to look again at these issues, which could bring them onto Haddrill’s
But the looming issue is audit competition and choice, or finding another big
audit player to relieve the risk of another disaster like Andersen. There are
those that believe Haddrill was not convinced by the argument to increase audit
‘choice’ and that he saw protecting the Big Four as the priority issue.
At the FRC, choice is still viewed as a major risk and the regulator has
focused a great deal of effort on the problem. Of course, we do not yet have
another player in the global audit market, though arguably, that was always
going to be a long-term project. Haddrill will have to ask if the regulator is
doing the right things and whether the project is moving at the right speed.
Haddrill will also have to contend with those who believe the audit choice
debate, and a focus on the risk of losing another big firm is giving too much
influence to the Big Four and their claims for more protection.
But the big firms campaign hard and there is much at stake in the current
crisis. He has a big challenge on his hands and he should prepare himself for
the lobbying to come.
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