The Local Authority Pension Fund Forum (LAPFF) has called on the UK government to give “serious consideration” to winding up the UK Financial Reporting Council (FRC).
In a hard-hitting attack on the UK audit and corporate governance watchdog, the LAPFF called for the FRC to be replaced with an independent companies commission.
The LAPFF said: “One reason why the FRC is failing is because it was never set up properly in the first place. The Treasury Select Committee described the position of the FRC as ‘inexplicable as it is unacceptable’.
“We agree and believe that Downing Street needs to take an active interest in the position of the FRC; it falls so far short of the standards expected in public life, it warrants intensive investigation.”
LAPFF also noted that, despite being a public authority, the FRC is not fully subject to the Freedom of Information Act.
The call came as part of LAPFF’s submission to a consultation on corporate governance from the Department for Business, Energy, and Industrial Strategy (BEIS).
The green paper sought comments on executive pay, strengthening the employee and customer voice, and corporate governance in large private businesses.
The FRC plans to launch a separate review of UK corporate governance later this year.
The LAPFF believes that the FRC has failed to enforce the Companies Act 2006 in respect of both the ‘true and fair’ accounting requirement and, more recently, in relation to the duty on directors to report compliance with s172 of the Companies Act. This requires company directors to act in the best interests of the success of their company.
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