Companies prepare for battle with FSA
The business community has condemned Financial Services Authority proposals to force companies to report quarterly saying that such a move will damage UK plc by encouraging short-termism.
Former ICI company secretary Ken Rushton has been hired by FSA chairman Howard Davies to head the UK listings department from August. One of his first tasks will be to lead a review of the rules which the FSA inherited ‘lock, stock and barrel’ when it became the UK’s overall financial services watchdog.
And, as predicted by AccountancyAge.com last week, the review will consider forcing all UK listed companies to publish mandatory quarterly reports.
The Confederation of British Industry, which has already consulted members, told Accountancy Age: ‘We don’t support mandatory quarterly reporting due to the seasonality of some businesses and cost issues.
‘Also, when companies have to report that frequently it doesn’t portray the bigger picture. It’s a short-termism issue.’
The move is also expected to generate strong resistance from finance directors and their auditors who share the CBI’s fears.
Peter Williams, finance director of department store Selfridges, said: ‘It will lead to more cost and more effort. And it could encourage the stock market to take more short-term views. You can get strange fluctuations. It would be onerous on business to have to do it. I question the added value of it.’
One financial services expert added: ‘Companies will be forced into a cycle. There won’t be time to review figures properly. There will also be unaudited figures.’
The review will begin in November when the FSA officially takes up its full powers. A spokesman for the watchdog confirmed that mandatory quarterly reporting would be one of the issues the agency will look at.
One of the FSA’s new powers is the ability to fine companies and directors that break listing rules.
Links
Quarterly reports on future FSA agenda