He's head of the Hundred Group, but Philip Broadley won't be fighting his battles with regulators in public. The Pru's finance chief revewals his five-point plan to promote the interests of UK plc
Philip Broadley refuses to say whether he wants to be a chief executive. ‘I
don’t think its relevant to my chairmanship of The Hundred Group,’ he says as we
wrap up our interview at the Prudential’s City offices. And that’s that – the
attempt at a diversion is dead. It’s talk about The Hundred Group of Finance
Directors or nothing else.
Fortunately for Broadley there’s a lot to say. The Prudential’s group finance
director took on The Hundred Group chairmanship at the end of last year and he’s
already given himself a prodigious agenda. So big in fact that you have to
wonder how he’s going to manage it all and still turn out the Pru’s financial
A passing reference to extending the working day explains that away, but even
so, detailing his upcoming agenda gives the impression that Broadley has taken
on a second full-time job.
Perhaps this is as it should be. The Hundred Group has built a reputation for
influence by harnessing the minds of the country’s finest FDs to the task of
lobbying government and regulators. A heavy workload should come as second
nature to the group’s membership.
As you might expect from an accountant though, Broadley is a man of order and
he has given himself a neat and tidy five-point agenda which, on close
inspection, looks more like Broadley’s five trials.
Here’s what he has on his plate: tackling international reporting standards
because there are a couple of years of hard graft still to do; developing a
meaningful relationship on behalf of FDs with the new pensions regulator;
grappling with the corporate tax agenda; improving the relationship with
investors; and growing the profile of The Hundred Group outside the UK –
particularly in Brussels and, if possible, in Washington too. Should have it
over by lunch time then.
As objectives go he could have given himself an easier time. Potentially they
could see Broadley pitted against some of the toughest people in UK finance. L
obbying on IFRS will see him confront the formidable Sir David Tweedie, while
tackling the tax agenda sees him having to tread carefully around Gordon Brown’s
current campaign on avoidance.
Broadley seems anything but worried, however. ‘One of the great advantages of
this job, one of the things that makes it fun, is that you get to set your own
brief,’ he says. And that he certainly has.
But don’t expect to read all about it in the papers. Broadley wants to
continue The Hundred Group’s tradition of working behind closed doors,
researching, influencing, nudging politicians, regulators and standard setters
towards decisions that he and his FD members believe are right for UK plc.
Take a recent event at which Sir David appeared before Hundred Group members
to talk on IFRS. The group polled beforehand so that it could tell Sir David
exactly what they thought of his standards. But will Broadley reveal what the
research was, or what view Sir David was confronted with? No, that card stays
close to his chest.
What he will say is that there is a concern about the growing complexity of
IFRS and the attention given over to the convergence programme with US GAAP.
While admitting that convergence is an agreed objective, he deftly delivers a
dig by adding that for a large number of Hundred Group members ‘the convergence
goal is not of itself immediately obvious as a benefit’.
He goes on: ‘So is there a case for saying, as well as convergence, which we
understand you’ve got to do, where does the simplification piece fit in the
agenda? Ultimately the risk is that the laudable goal – that all this helps
improve communication between preparers of financial statements and their users
– that’s not achieved.’ Gentle and yet, somehow, not.
The Hundred Group’s ‘quiet way’ is evident in its approach to tax too. On the
one hand, Broadley is going to be pushing the group’s latest project – the
financing of a special research unit based at Oxford University looking at
corporate tax issues.
Set up with funds raised by Broadley’s predecessor, Jon Symonds, the unit
will offer independent research, but will look in particular at the total
corporate tax contribution made by UK companies – an issue brought to the fore
by the Treasury’s continued pressure on avoidance.
But are Broadley and The Hundred Group challenging government? ‘I wouldn’t
use the word challenge,’ he says. ‘The Hundred Group has been around for 35
years, influencing in a relatively quiet way. I think it’s a successful formula,
I’m not about to radically change it.’
There doesn’t seem a policy area in which the softly softly approach can’t be
used. It also extends to his view on the new pensions regulation regime. His
broad point is that there is some work to be done in making sure everyone
understands that valuing pensions, under the new fair value regime, is a
‘Actuaries have historically simplified down to one number, whereas in
pension funds there are a range of outcomes…each will give you a significantly
different answer,’ he says. Liabilities will be sorted by increased
contributions over time, he insists, adding that a balance has to be struck
between competing stakeholders to ensure that unintended consequence are, for
the most part, avoided.
And he wants The Hundred Group to play a role in finding a solution to
ensuring that pension obligations are met. But he resists criticising the
current policy that all deficits have to be cleared in 10 years. ‘It’s too early
to judge that at the moment. I don’t try and rush into decisions.’ Nor will he
say if the 10-year benchmark should be a margin or a finite number. He needs to
see it in practice first.
In good faith
If there is an area where Broadley seems more willing to be robust in his
public statements it is on an issue outside his five themes.
Indeed he has a sixth trial – convincing government that directors should
have legal protection, a safe harbour, from lawsuits attacking forward
statements, made in ‘good faith’ as part of the operating and financial review,
which turn out to be wrong.
Gordon Brown first repealed, then instigated another consultation on the OFR
in November last year. Broadley is set on making his claim for a safe harbour
He expects to meet with Department of Trade and Industry and Treasury
officials to press his claim before the end of the consultation on 24 March.
Without it he believes that narrative reporting would be reduced to minimising
the legal risk to directors – not increasing clarity for investors. ‘We’ve
always taken the view that’s the best way to get transparent reporting – where
companies are directly in dialogue with shareholders,’ he says.
But don’t expect Broadley to be holding his dialogue with the policy makers
in public. Much of his work will disappear from view, until we see the results,