Independent Review of the Financial Reporting Council

The IR Society response to the independent review of the Financial Reporting Council.

FRC Review Secretariat
Victoria 1, 1st Floor,
1 Victoria Street,
London, SW1H 0ET

2nd August 2018

Re: Independent Review of the Financial Reporting Council

Dear Sir, Madam, 

Thank you for giving us the opportunity to respond to the independent review of the Financial Reporting Council.

The Investor Relations Society’s mission is to promote best practice in investor relations; to support the professional development of its members; to represent their views to regulatory bodies, the investment community and government; and to act as a forum for issuers and the investment community. The Investor Relations Society represents members working for public companies and consultancies to assist them in the development of effective two-way communication with the markets and to create a level playing field for all investors. It has over 850 members drawn both from the UK and overseas, including the majority of the FTSE 100 and much of the FTSE 250.

With our role as a professional body for investor relations practitioners, our area of focus within your review is on the FRCs role within corporate governance and stewardship rather than audit, and our response to the independent enquiry can be summarised as follows: 

  • Overall, we support the review of the FRC to ensure trust and quality in corporate governance and stewardship
  • The Society acknowledges the good work conducted by the FRC, including the recently revised UK Corporate Governance Code and the upcoming review of the Stewardship Code
  • The Society supports initiatives such as the FRC Lab
  • With an increasing focus from the FRC around corporate governance and stewardship the Society would encourage the FRC to draw on the skills and resources of those who are directly impacted, and comply with the FRC codes, including companies and investors.

IR Society welcomes revised UK Corporate Governance Code and review of Stewardship Code

The IR Society is a strong supporter of both the UK Corporate Governance Code and the Stewardship Code and both are vitally important in well-functioning equity markets. The IR Society welcomed the recently announced revised UK Corporate Governance Code which emphasizes the importance of culture in the organization and greater focus on directors’ duties.

The IR Society also supports the FRC’s initiative and upcoming consultation on an updated Stewardship Code and suggestions on its improvement to drive best practice reporting and stewardship activity. We acknowledge the Code's efforts to promote greater alignment and engagement between investors and companies, as well as the importance of the role of the investor in wider society. 

The FRC Lab

The IR Society has a longstanding relationship with the FRC’s Financial Reporting Lab, and regularly contributes to roundtable discussions and panels as part of their work. We support FRC initiatives such as the Lab, where they are trying to be more innovative and solving some of the reporting challenges outside of their current restrictions.


Regarding the FRC’s ability to undertake investigations or enforcement at speed, the Society appreciates that the FRC will continue where it can to hold auditors to account and company directors to the extent they can, but they have limited powers, and a lack of resources. The FRC has limited powers with regards to speed of action and enforcement, when they only see a company’s accounts once made public.  If more swift and effective enforcement action is required, then the FRC’s terms of reference will need to be redefined.

Skills and Resourcing

While the FRC is responsible for the UK Corporate Governance Code and Stewardship Code, this is a principled, ‘comply or explain’ approach and we would agree with previous comments that the FRC has no business intervening in the ‘day to day management of companies to prevent them failing.’ With the new UK Corporate Governance Code and further work around the Stewardship Code we would suggest the FRC could increase resources and skills around the experience of companies and investors, who are those institutions complying with these Codes.

We hope you find these comments useful and please do not hesitate to contact me if you require any further clarification.

Kind regards,

Emma Burdett
Chair of The Investor Relations Society’s Policy Committee
020 7379 5151 /

Published 2 August, 2018

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