Public views on regulation of corporate reporting, audit and governance
02 October 2019
New research supports the Financial Reporting Council (FRC) taking firmer action to hold companies to account. Participants in a series of ‘citizens’ juries’ believed the FRC should have more "power" and "teeth" to hold companies to account, but any increase in regulation should not stifle companies’ ability to operate and flourish.
The independent research, conducted on behalf of the FRC by BritainThinks, involved in-depth research with members of the public across the country.
Almost everyone has an interest in the success of UK companies whether as an employee, a direct investor, a pension fund member or an interest-bearing account holder and therefore in the effectiveness of the FRC as a regulator.
The discussion-based approach, known as citizens’ juries, allowed participants to be presented with, and have time to discuss and interrogate, information about corporate reporting, corporate governance, audit and the FRC’s work in these areas.
While citizens’ initial views of companies tended to be negative with greed and corporate misdemeanors front of mind, when considering the impact companies can have on the UK, particularly on the economy and local areas, participants had more positive perceptions. In particular, participants highlighted the importance of companies in providing employment, products and services, and investing in the UK.
As well as more power, participants thought the Regulator should hold individuals (other than those who are members of a professional body presently) and companies to account to deter wrongdoing. They also believed the Regulator and companies should operate in the public interest, taking into account the views of wider audiences, including employees, and improve diversity on boards.
The citizens also thought that the Regulator should maintain its independence from those it regulates at all costs. Participants felt it was particularly important to ensure the independence of non-executive directors and audit partners from the companies they work with.
Videos summarising the findings, with direct input from participants can be viewed here
along with the report.
The final report can be downloaded here
Notes to Editors:
Citizens’ juries, comprising 18-20 members of the public in each jury, were held in London, Edinburgh and Coventry, plus a reconvened workshop with participants from all three locations. Participants were, recruited to reflect the local population and ensure that a broadly representative and diverse sample of the general public were consulted.