Stephen Haddrill to quit Financial Reporting Council
2 Nov 2018
The head of the Financial Reporting Council (FRC) Stephen Haddrill is to leave the audit regulator as soon as a replacement is found
2 Nov 2018
The move comes as the audit regulator has come under intense pressure to tighten up its oversight of the UK regulated audit market following a number of audit scandals and harsh criticism from MPs over the Carillion collapse, where MPs described the FRC as a ‘toothless regulator’.
Increasing pressure on the regulator and the stranglehold of the Big Four audit firms on statutory audit has also forced a second competition probe, as the Competition and Markets Authority (CMA) launched a second market review into the lack of competition in the audit market, which is dominated by the Big Four audit firms, PwC, Deloitte, EY and KPMG with 93% of FTSE 350 companies audited by one of these firms.
The CMA probe, launched in October, followed several months of preliminary investigations and meetings between the CMA and the regulator, professional institutes and audit firms over the summer. The initial consultation period closed for comment on 31 October, and one of CMA’s key objectives is to consider whether to break up the Big Four to increase competition for statutory audit.
Haddrill, who has has been chief executive officer of the FRC since November 2009, has given a long notice period but has indicated that he will leave the regulator by late 2019.
The exact date of his departure will depend on a number of factors including the outcome of the Kingman review of the FRC, which is due to report by the end of the year, the search for his successor, and any agreed transition period associated with that appointment.
The Department for Business, Energy and Industrial Strategy (BEIS) will work with the FRC on the appointment of a new CEO, although no appointment will be made until the Kingman review is released, which is examining the effectiveness of the FRC as a regulator.
Business secretary Greg Clark said: ‘I'd like to thank Stephen for his work over the last nine years, including upgrading the UK's corporate governance code, helping drive improvements in the way businesses are run.
‘We will work with the FRC to appoint a new chief executive once the outcome of the independent review by Sir John Kingman is known.’
This is the second senior departure from the regulator this year. In July the executive director of audit Melanie Hind [McLaren] also stepped down, and was replaced on an interim basis by acting director Mike Suffield.
Before joining the FRC, Haddrill was director general of the Association of British Insurers (ABI) from 2005 to 2009. He does not come from an audit background and did not train at the Big Four.
Prior to the ABI, he was director general, fair markets group at the Department of Trade and Industry (DTI) [predecessor to BEIS], where he was responsible for the development of the framework within which business operates, including the competition and consumer framework, employment relations, company law, women and equality issues, and also trade and European issues. He held this position from January 2002.
Admitting that the audit profession is facing a turbulent time, FRC chairman Sir Win Bischoff said: ‘I would personally like to thank Stephen and also on behalf of the board, committees and councils of the FRC for his leadership and commitment over this significant period in our history.’
Report by Sara White