Insurance man to lord it over auditors
That’s a slightly provocative headline I’ll admit, but the Financial Reporting Council has a new chief executive (not starting until November) and he is Stephen Haddrill, currently director general of the Association of British Insurers.
Haddrill’s CV reveals he is something of a career regulator, having headed the Fair Markets Group at the department of trade before heading off in 2005 to help insurers do their jobs.
But what’s important is what interests and agenda he brings to the FRC. The council’s chairman Sir Christopher Hogg gave us a clue in his welcoming statement this week. He said Haddrill would bring the interests of investors to the table.
That’s important because while Paul Boyle, current CEO, has hardly been the auditor’s best friend (or, rather, we should say he hasn’t been best buddy to the Big Four having challenged their hegemony with a distinct effort to bring another player into the global audit market) Haddrill looks as if he might be one step removed again from being sympathetic to their position.
What happens when big auditors look for more protection through limited liability agreements, as they currently are? Does a man with the interests of investors upper most in his mind buy into the argument that auditors bear too much liability? Across the water in Washington the Securities and Exchange Commission refuses to buy into that. If Haddrill remains detached and unsupportive, what are the chances getting the legislative backing for limiting liability?
Last week MPs on the Treasury select committee said that they believed the auditors of banks regress into ‘tunnel vision’ where the ‘big picture’ interests of shareholders is lost. It’s a comment aimed largely at ‘process’ rather than auditors themselves, but it’s hardly a ringing endorsement and sets the tone for the public perception of what auditors are doing. And it’s unlikely to lead to a very high opinion.
How will Haddrill respond? His ‘investor’ focus could well mean he will buy into that view and it could make for difficult auditor relations in the near future.