Policy Update

“If no one knows what you’re doing, then no one knows what you’re doing wrong”

- Sir Humphrey Appleby

Well I certainly drove a coach and four through that maxim this morning. I was delighted that just shy of fifty ICSA members and guests were sufficiently enthused that they braved the shock of an early morning start to find out what the policy team has been up to over the past few months.

The breakfast briefing at Saffron House gave an overview of some of the hot topics on which the policy team have been working. We had planned to run four of these sessions throughout the year, subject to interest. Following the unanimously positive feedback from those who attended this launch event, it looks very likely that we will be continuing with them. My learning point from the morning is to persuade some of my colleagues to share presenting duties!

The slides from the presentation are available here. In brief, I tried to cover four issues:

  • the new register of Persons with Significant Control (the PSC Register) being introduced by the Government in the Small Business, Enterprise and Employment Bill, currently being debated in parliament;
  • the UK Implementation of the EU Audit Directive and Regulation, on which we have recently been favoured with consultations by both the Department for Business, Innovation and Skills (BIS) and the Financial Reporting Council (FRC);
  • the revised pre-emption group guidelines, published by the FRC last week; and
  • investor stewardship, where we are seeking issuer feedback on the effectiveness of the Stewardship Code.

As I made clear this morning, the concept of Persons with Significant Control has no connection whatsoever to any number of shades of grey, but is a development of the Government’s commitment to corporate transparency. Companies will be required to hold details of people who own or control more than 25% of the company and to register these details at Companies House. I have been asked to chair a working group assisting BIS in drafting the non-statutory guidance for the PSC register and would welcome any suggestions for topics that the guidance might cover.

BIS and the FRC have been consulting on how the EU Audit Directive and Regulation might be implemented in the UK. The Directive brings new requirements around the rotation of auditors, restricts non-audit services, changes the duties of audit committees, increases the detail of audit reporting and bans contractual restrictions on the appointment of auditors. The changes are far-reaching and likely to affect nearly all companies, so make sure you are well informed and ready for the implementation dates. ICSA has made submissions to both consultations – see our BIS submission and our FRC submission.

Last week the FRC circulated an update to the pre-emption group guidelines, last revised in 2008, clarifying the scope of the original guidelines and making some minor amendments to reflect current market practice. Full information can be found on the FRC website.

Finally, I looked at Investor Stewardship. With the support of the FRC, we are surveying companies to obtain better information as to how effectively investors are engaging with them in the light of the requirements of the Stewardship Code. It is really important that companies respond to this survey if they have any concerns about the effectiveness of the stewardship process.

There were a number of questions on all the subjects that we discussed. All in all, it was a really busy morning, and I am looking forward to future sessions.

Future Policy Updates:

Monday 18th May – Not for Profit

Tuesday 30th June – Corporate

Tuesday 22nd September – Corporate

Thursday 12th November – Not for Profit

Peter Swabey is Policy and Research Director at ICSA: The Governance Institute

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