The Financial Reporting Council (FRC) today published its
seventh Annual Enforcement
Review which provides an overview of the FRC's case
assessment, investigations and enforcement activity for the
period 2024-2025.
In support of the FRC's improvement role, the Review examines the
principles underpinning the notable cases concluded in the last
year. It explains how the principle of proportionality continues
to be applied to shape and inform the FRC's approach to delivery
of fair, consistent and evidentially robust outcomes. This
year nine investigations were concluded by way of settlement, two
were closed with no further action and 12 matters were resolved
through constructive engagement. Financial sanctions totalling
£14.5m were imposed.
Timeliness of outcomes has remained a particular focus. This year
90% of applicable investigations were completed or resolved
within two years, exceeding by a significant margin both the
relevant KPI (50%) and performance in all prior years as measured
against this benchmark since it was introduced. The FRC's
three-year KPI was also met. These results were achieved in the
context of a further year of consolidation and a reduction in
headcount.
The Review also notes the FRC's ongoing project to review and
refresh its end-to-end enforcement approach from initial case
assessment to publication of final outcomes. The End-to-End
Enforcement Review (E2E Review) will examine all aspects of the
process including governance, and key decision-making. The focus
of the E2E Review includes the introduction of a graduated range
of regulatory responses as part of bolstering the FRC's toolkit
in support of proportionality and building on the progress made
on timeliness in recent years. Stakeholder engagement has been
supportive, ahead of a public consultation later this year.
Elizabeth Barrett, FRC Executive Director of Enforcement,
said:
“Whilst in recent years there has been positive progress on
increasingly timely delivery of fair, evidentially robust
outcomes, the procedural options currently available to the FRC
limit significant further improvement.
“The E2E Review is a major initiative straddling work in
Supervision, Enforcement and our Legal Services team, which aims
to take matters to the next level. The proposed introduction of a
graduated range of responses is designed to ensure that our
approach remains adaptable, market-responsive and serves the
public interest while reducing unnecessary burdens.”
Read the Annual Enforcement
Review.
Listen to the FRC's latest In
Conversation podcast episode about this, featuring Kate
O'Neill, Director of Stakeholder Engagement and Corporate Affairs
and Elizabeth Barrett, Executive Director of Enforcement and
Executive Counsel.
Notes to
editors:
The purpose of the FRC is to serve the
public interest and support UK economic growth by upholding high
standards of corporate governance, corporate reporting, audit and
actuarial work.
The FRC sets the UK Corporate
Governance and Stewardship Codes and UK standards for accounting
and actuarial work; monitors and takes action to promote the
quality of corporate reporting; and operates independent
enforcement arrangements for accountants and actuaries.
As the competent authority for
statutory audit in the UK, the FRC sets UK auditing and ethical
standards, monitors audit quality and operates an enforcement
regime in respect of statutory auditors and statutory audit
firms.
Past FRC
Enforcement Outcomes can be found
here.
