Launching the FRC's Innovation and Improvement Hub
Published: 15 September 2025
9 minute read
In this episode Kate O'Neill, our Director of Stakeholder of Stakeholder Engagement and Corporate Affairs sits down with our CEO, Richard Moriarty and Director of Strategy and Change, Miranda Craig to discuss the launch of the FRC's new Innovation and Improvement Hub which aims to create an explorative space to work collaboratively with market participants on issues of common concern.
Transcript
00:00:09:04 – 00:00:32:23
Kate O'Neill
Hi there and welcome to another FRC in conversation. My name is Kate O'Neill. I'm the director of stakeholder engagement at Corporate Affairs, and today I'm joined by our CEO, Richard Moriarty, and our Director of Strategy and Change here at the FRC, Miranda Craig, who are here today to join me to talk about an exciting launch of a new initiative for innovation and improvement.
00:00:33:00 – 00:00:46:11
Kate O'Neill
Welcome, Miranda and Richard, but I'll start off with you, Richard. What's this hub and why should a regulator be launching it? I think you've had some experience with these in previous parts of your career in the regulatory environment.
00:00:46:13 – 00:01:19:01
Richard Moriarty
That's right Kate. I know the public expects regulators to set standards and hold people to account for meeting them, but I think there's also an additional important role for regulators, which is to encourage improvement and enable innovation about how people can achieve those high standards and support economic growth. At the FRC, we've had a space for a little while called our Sandbox, which has done some really interesting work in terms of new approaches to audit, particularly local audit, to help clear some of the backlog in that sector.
00:01:19:03 – 00:01:47:09
Richard Moriarty
And I was really keen to up the level of ambition to bring that type of thinking across all of our work on corporate governance, financial reporting and audit. And the aim is to create a safe, explorative space for the regulator and market participants to work collaboratively together to unlock progress on issues of common concern. Miranda will say more about this, but for me, there are three early priorities for this work.
00:01:47:10 – 00:02:19:10
Richard Moriarty
First of all, how artificial intelligence might affect the future of audit. Very interested in exploring the boundaries there. Secondly, I'm really keen to work with a number of companies on seeing if we can together cut down the length of the annual report and accounts which have really grown in recent years. And then thirdly, really keen to offer dedicated resources to some of the smaller audit firms to help build their capabilities around quality management systems.
00:02:19:15 – 00:02:28:02
Richard Moriarty
And also for us to learn, too, on what proportionate oversight means for some of those very small audit firms.
00:02:28:04 – 00:02:54:19
Kate O'Neill
I think some of these issues, I mean, you've talked about them more generally, but also we've heard a lot about these priorities you've just outlined in some of our ongoing projects, such as our SME project, such as our future of audit supervision. So it sounds like these priorities are really building on ongoing work of the FRC and reflecting some concerns and challenges from our stakeholders.
00:02:54:21 – 00:03:30:04
Richard Moriarty
That's absolutely right, Kate. I mean, this is all about how do we both support high standards for corporate governance, financial reporting and audit, but also support economic growth? What I would say is, in creating that safe and explorative space to try things, I think it's really important that we have a different type of conversation with market participants—a conversation that is characterised in tone by collaboration about meeting a common interest, and not one which is more supervisory and regulatory.
00:03:30:06 – 00:03:56:11
Kate O'Neill
And when you talk about building capacity across the market, we did announce last week an important project looking at creating capacity and capabilities in smaller audit firms to not only just take on public interest entity audits, but also to help small firms learn from other firms in the market how to improve the quality management systems and capabilities generally.
00:03:58:01 – 00:04:34:02
Richard Moriarty
That's right. I wrote to many of the smaller audit firms last week to invite them to participate in a new initiative where we will support them in building their quality management systems, and also we will learn from them on how to better make our oversight of the smaller firms more proportionate. In exchange for this programme, we will have a different type of supervisory regime for these firms over a couple of years, and it's really about enhancing their improvement.
00:04:34:05 – 00:04:44:17
Richard Moriarty
So subject to their commitment and progress and their appetite to take on more growth in the Public Interest audit market, we would be really keen to hear from these firms.
00:04:44:19 – 00:04:59:01
Kate O'Neill
So this is, Richard, a great example of the Scale Box being a basis for a stream of work to help specific firms receive that support, to create capacity and capability in the market.
00:04:59:03 – 00:05:12:16
Richard Moriarty
That's right—within the overall innovation hub is a particular programme called the Scale Box, which is aimed at the smaller audit firms and helping them build their capabilities to grow in the Public Interest audit space.
00:05:12:18 – 00:05:39:13
Kate O'Neill
I think that's a really key point for our listeners. And I guess Miranda, the hub, as we've kind of touched on, is bringing together some existing initiatives like the Audit Sandbox and Scale Box, and obviously some of the streams around the priorities that Richard's laid out. But how do you think all stakeholders are going to benefit from this kind of more cross FRC approach rather than individual standalone initiatives?
00:05:39:15 – 00:06:07:24
Miranda Craig
Thanks, Kate. That's a really good question. So I think that in many ways, really key stakeholder benefit here is that there's an increased choice of routes into our regulatory support. So as Richard says, you know, we've got supervisory responsibilities. We've got standards setting responsibilities. And each stakeholder has a particular interest in different parts of the FRC. So it makes sense to have this joined up approach and to work really closely together.
00:06:07:24 – 00:06:38:06
Miranda Craig
For example, with the sandbox and sandbox teams, widen out and introduce some new elements to our innovation offering. So that includes a new technology sandbox and also a cross regulatory initiative because joined up internally is one part of the puzzle, but joined up externally with other regulators across the whole ecosystem is just as important. And as Richard points out, a real driver of how the regulatory framework in the UK can drive economic growth.
00:06:38:08 – 00:07:08:15
Kate O'Neill
I think, as both of you have alluded to, we have some of our work at FRC. We have to work as part of the system, the regulatory system reflecting there are lots of different touch points. So I guess what you've said under is that it plays to Richard's point about proportionality and perhaps lifting burdens, because we're really going to look at it from a FRC point of view rather than lots of initiatives, which, let's be fair to some stakeholders, might feel like a lot to get involved in individually.
00:07:08:17 – 00:07:38:09
Miranda Craig
Absolutely. This is not a scattergun approach. We want to be really targeted and focused on the areas where we're going to see the most bang for buck. But, you know, the messages we hear and you hear your team around all the time talking to stakeholders is that they want stability and they want certainty and regulatory certainty. How do I navigate this landscape as quickly and efficiently and as cost effectively as possible? That's what we're here to do as an improvement regulator.
00:07:38:11 – 00:08:01:22
Kate O'Neill
I think we've talked about it before being as disciplined as we can be. We'll reassure our stakeholders that they're not going to kind of get a raft of requests for information. Consultations will be very much looking at what are the key issues emerging, and maybe doing some horizon scanning, as well as to what may emerge in the future.
00:08:02:01 – 00:08:28:21
Miranda Craig
Yeah, and one of the great things about this benefit for us is continuous learning. And we can apply things that we learned from Sandbox and Scale Box activities to our business as usual regulatory work. But I think it's really important that stakeholders understand that this is a voluntary initiative. It'll be driven by the degree of interest of people in participating in it.
00:08:28:21 – 00:08:50:03
Miranda Craig
So we won't be asking more of people than they're prepared to offer. It's very much, you know, as Richard says, it's about collaboration. If you've got a challenge that you feel the FRC can help you meet, and we think that that is aligned with our strategic objectives, and there's a public interest benefit in pursuing that. Let's work together and see what we can come up with.
00:08:50:07 – 00:09:00:01
Miranda Craig
It might not always work, and people will always be free to come in and out of our sandboxes if they feel they're benefiting them or not. But, you know, let's see what we can do.
00:09:00:03 – 00:09:18:18
Kate O'Neill
So I mean, I think that's an excellent point, Miranda. And I think, Richard, you would have seen this in previous hubs. That's the right way to describe it. Not every idea will work, but it's a good chance to kick the tyres, really explore the art of the possible, and sometimes perhaps walk away saying, "It's not for now, it's not for us."
00:09:19:05 – 00:09:41:19
Richard Moriarty
That's absolutely right, Kate. I mean, when I was at the Civil Aviation Authority, I helped set up the innovation hub there, which did some really interesting work on the future of drones and electric flying taxis in a safety critical environment. So I'm really thinking that we can bring a similar approach here to governance, financial reporting and audit.
00:09:41:21 – 00:10:16:21
Richard Moriarty
But we have to lean into this knowing that some things won't work and that's fine. That's absolutely fine provided they fail fast and also within the portfolio, we have a number of offerings that can actually make a difference. So for me, in 12 months' time, I'm hoping that success looks like we've got the hub established. We're having different types of conversations with market participants, and we really are starting to see a number of these areas bear fruit in terms of change and innovation, that could make a difference to the outcomes that we care about.
00:10:16:23 – 00:10:34:03
Kate O'Neill
Now if our listeners are going, great. This is for me. How is it going to work in practice and how do they get involved? I mean, obviously the stakeholder engagement team are going to work very closely with you and your team to provide ideas, access, etc. but what are the strands of this hub?
00:10:34:06 – 00:11:03:08
Miranda Craig
So in practical terms, we've got our existing audit sandbox but widened and renamed as the Codes and Standards Sandbox. And that will deploy a similar approach to what it already does, using a roundtable format—many practitioners will address application challenges with codes and standards. And we've got a new bit, the technology sandbox. So that will be as it says on the tin, a sandbox environment to look at the use and application of technology across any parts of our remit.
00:11:03:08 – 00:11:25:05
Miranda Craig
So if you're a technology provider or a consumer of technology that relates to governance, reporting, audit, any actuarial, any part of our remit, anything that sounds of interest, then please do let us know. And then the Cross Regulation initiative will work with other regulators who we speak to regularly to see where we've got shared objectives and where there are challenges to us meeting those objectives.
00:11:25:05 – 00:11:50:15
Miranda Craig
And can we work more closely together to come up with solutions that help us meet those challenges? Across all of that we'll work very closely with our Scale Box colleagues to ensure that Scale Box members, so the smaller audit firms, are able to take advantage of those sandbox opportunities. So it's very much a case of watch this space for further communication about the precise projects that we're going to launch within the hub.
00:11:50:15 – 00:12:10:01
Miranda Craig
We do have an email address for people who just can't wait and really want to find out more, or be sort of the first to hear about things. And that's [email protected], so feel free to email there if you've got ideas or you want to hear more. And really, what we're going to do is we'll have roundtable options, but we'll have a lot more one to one support as well.
00:12:10:01 – 00:12:22:24
Miranda Craig
So the sandboxes will be completely confidential. They will involve one on one discussions with us as regulator and participant. And that is something that we, to date, have not really done.
00:12:23:01 – 00:12:49:04
Kate O'Neill
So success 12 months on. I'll start with you, Miranda. What would be a couple of things you'd want to either be able to measure or at least hear, maybe on a more qualitative basis from stakeholders as to how the hub has either given people opportunities to really feed into our approach to being a regulator, or with ideas for the hub?
00:12:49:06 – 00:13:12:15
Miranda Craig
Thanks, Kate. This is such a tough one because everybody always wants a really easy to measure success measure. But for me because this is so new for us, I think building that trust that the hub is a useful new addition to our toolkit. Success would look like having really strong take up from stakeholders recognising that they want to work with us.
00:13:12:15 – 00:13:35:00
Miranda Craig
So for me, that's a key success measure in the beginning. And what flows from that is increased trust and engagement. I think there's a halo effect. We will see benefit elsewhere in the FRC and outside the FRC, if we get those two things. I know that Richard, being chief executive, will also want to hold the team to account for some more outcomes based metrics.
00:13:35:00 – 00:13:37:22
Miranda Craig
But for me, to begin with, those are the things I want to see.
00:13:38:00 – 00:14:01:17
Kate O'Neill
Richard, for you, I mean, as CEO of the FRC and this is a true cross FRC initiative, what will you want to be talking to our stakeholders and people like the Department for Business and Trade and other parts of government about how this has really helped the FRC drive better outcomes for stakeholders and also the things you often talk about—proportionality, smart regulation?
00:14:01:19 – 00:14:35:02
Richard Moriarty
In 12 months' time, Kate, I really want to make a reality of the Innovation Hub. I want it to be seen as a vital platform in how the FRC works with market participants to both drive up standards and capability, but also support growth. In doing so, I think it's going to be important that we have a good degree of take up from some interested market participants, and also the feedback we get from them is that it reflects a different type of conversation to the usual regulatory supervisory conversation.
00:14:35:04 – 00:14:59:17
Richard Moriarty
And I would hope in 12 months' time, in line with the three priorities I talked about earlier, we are making some serious momentum towards, you know, creating some change. Not everything is going to work. And I think we have to lean into this with an expectation that actually we embrace doing things differently and trying things, and that means not everything's going to work.
00:14:59:19 – 00:15:23:14
Kate O'Neill
So thanks to you both. As Miranda said, this information on our website, there's a dedicated email address, and I guess we'll be updating our stakeholders over the coming months with some of the new projects under the hub initiative as they are launched. So we will be inviting you back, Richard and Miranda, to talk, perhaps in a few months on progress after that time.
00:15:23:16 – 00:15:24:23
Miranda Craig
Alright, look forward to it.
00:15:25:00 – 00:15:25:13
Richard Moriarty
Thank you, Kate.