Ministers ditch City reporting overhaul after backlash against more red tape
The government has ditched its plans to introduce burdensome new reporting requirements to UK companies today amid concerns over the amount of red tape entangling British firms.
In an announcement today, the Department of Business and Trade said it had withdrawn draft new regulation published earlier this year after firms “raised concerns” in a consultation.
Ministers had published draft legislation in July that set out plans to force large UK listed and private companies to publish documents including annual resilience statements, distributable profit figures, material fraud statements and triennial audit and assurance policy statements.
However, the plans have come amid a wider drive from top City figures and the government to strip back red tape from the market and make London a more attractive place for companies to list.
In an announcement today, the Department for Business and Trade said the Business Secretary Kemi Badenoch had conceded the planned changes would pile additional costs on companies and committed to scrapping the measures, in a move hailed by top City figures.
“This is a welcome step and will boost the competitiveness of the UK,” said Julia Hoggett, chief executive of the London Stock Exchange. “Good corporate governance should be an enabler for companies to grow and reach their full potential in the interests of all stakeholders.”
Founders and company boards were already pointing to the UK’s “ever-increasing corporate governance processes” as a reason for the decline of the international standing of the UK over other capital markets, she added.
Burkhard Keese, chief financial officer of Lloyd’s, said the insurance market welcomed the move to ditch added requirements and said it was a “first step” to creating a “proportionate and competitive corporate governance framework”.
The government has committed to wider reform of reporting and governance but the plans to strengthen the regime triggered fears over what is already considered a cumbersome reporting regime compared with international competitors like the US.
A report by banking and finance lobby group UK Finance earlier this year found that firms cited the “considerable cost of being publicly traded” — including the price of governance, reporting and audits — as a disincentive to listing in London.
Regulators and the London Stock Exchange have committed to slimming down the regulatory rule book in other areas, including streamlining the prospectus regime for companies before they list and removing the arduous approvals process that require companies to get the go-ahead to list.
Badenoch launched a more sweeping review of the regulatory landscape in the UK earlier this month to hunt for areas where rules could be stripped back.
Ministers have also shelved plans to introduce sweeping audit reform and replace the current regulator, the FInancial Reporting Council, with a new body. Ministers said today they would pick up the plans when “parliamentary time allows”.