Gavin Hinks, Accountancy Age, Monday 26 July 2010 at 14:50:00

Accountancy regulator could be merged with Financial Services Authority

The government has proposed merging the UK's listing authority, the FinancialServices Authority, with the Financial Reporting Council, the body thatregulates the accounting profession and financial reporting in the UK.

The proposal comes in a paper published byTheTreasury today as part of proposals for sweeping reform of financialregulation in the UK.

A consultation paper from the government said that merging the FRC with theUK's listing authority "would have the benefit of bringing the UKLA?s regulationof primary market activity alongside FRC functions relating to companyreporting,audit and corporate governance."

The new regulator would be part of the department for business and come underthe responsibility of business secretary Vincent Cable.

Cable has expressed misgivings about the restricted number of big audit firmsnad has spoken opening up the audit market to more firms.

The Treasury consultation document said: "The Government believes that,within the proposed new regulatory architecture, there is a strong case for apowerful companies regulator established with responsibilities for regulatingcorporate governance, corporate information and its disclosure, and thestewardship of companies by institutional shareholders."

The Treasury document, A New Approach to Financial Regulationenormous change to financial regulation. It lays the creation of aFinancial Policy Committee (FPC) to be housed in the Bank of England that wouldensure financial stability in the UK. Reporting to the FPC would be a PrudentialRegulatory Authority (PRA) and an independent Consumer Protection and MarketAuthority (CPMA).

The consultation document said: "Perhaps the most obvious failing of the UKsystem, however, is the fact that no single institution has the responsibility,authority or powers to monitor the system as a whole, identify potentiallydestabilising trends, and respond to them with concerted action."

However, it is not yet decided whether the merged FSA (listing authority) andFRC should be part of the CPMA, or whether it should sit outside this frameworkunder the department of business.

PwC responded quickly to the consultation paper saying "at this stage, theproposals remain very high level. Many questions continue to remain unanswered,including the detailed implementation roadmap. This information will be vital ifthis new structure is to be a success and so that firms can start planning theirown transition projects."

Read more:

Calefuels debate over audit market

FSApowers will forces auditors to speak out

Haddrillcalls for expanded FRC powers