Investors take up senior FD’s fair value grievance

ACCOUNTING STANDARDS have attracted investor criticism after Barclays finance director Chris Lucas yesterday urged revisions to IAS 39.

Lucas said the standard allows banks to book unrealised gains on debt due to widening credit spreads, calling for an overhaul of the “opaque and complex” rules.

Investors’ qualms relate to this issue – broadly known as ‘fair value’ – and impairment, which critics say means banks do not have to report failing debt until it is too late.

Robert Talbut of Royal London Asset Management, told The Telegraph: “This standard takes banks reporting further away from economic reality and should be seen as unhelpful in improving clarity and understanding of their returns.”

Aviva Investors’ Iain Richards, said: “The issues go wider… ‘Neutrality’ and the theoretical underpinnings of IFRS have divorced the standards from substance, prudence and the true and fair view principle.”

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Fiona Westwood of Smith and Williamson.