Former Tory MEP Fox lined up to join board of audit regulator

January 21, 2022

A former Conservative MEP is to become a director of the audit regulator as the government seeks to head off criticism of the body responsible for overseeing corporate governance in company boardrooms.

Sky News has learnt that Sir Ashley Fox, who was a member of the European Parliament for a decade, will be one of several appointments to the board of the Financial Reporting Council (FRC) in the coming weeks.

Sir Ashley is now a member of the international advisory council of the consulting firm APCO Worldwide.

He stepped down as a Conservative MEP in 2019, and was knighted for political and public service in the same year.

The appointment of several directors to the FRC board, which is the responsibility of the Department for Business, Energy and Industrial Strategy (BEIS), will follow an awkward vacuum of independent directors at the regulator.

The government confirmed a Sky News report last month that Sir Jan du Plessis, the former BT Group chairman, would become its first permanent chair in nearly two years.

Sir Jan will take part in a pre-appointment hearing with MPs next week.

The governance overhaul at the FRC comes at a particularly important time, with the body due to be scrapped and replaced by a statutory regulator called the Audit, Reporting and Governance Authority (ARGA).

Kwasi Kwarteng, the business secretary, has spoken about audit reform being a priority for the government, although it has yet to formally deliver its response to a consultation on the future of audit regulation.

Government sources say their objective is to legislate and have ARGA operational by about the spring of 2023.

As the body responsible for overseeing corporate governance standards in the boardrooms of Britain's biggest companies, the FRC has been left embarrassed by its own leadership vacuum.

Simon Dingemans, its last chairman, decided to step down in 2020 after clashing with government officials over the extent of his outside business interests.

Since then, Keith Skeoch, former co-chief executive of the asset management group now called abrdn, held the FRC chairmanship on an interim basis, but he too stepped down last year.

Ironically, the extension of his tenure took Mr Skeoch beyond the nine-year stint on the FRC board that the regulator regards as a ceiling on the independence of directors on corporate boards.

Notwithstanding the problems recruiting new non-executive directors, the FRC is now regarded as having competent executive management in the form of Sir Jon Thompson, the former boss of HM Revenue and Customs.

The identity of the other new FRC directors was unclear on Friday.

The impetus for audit reform has been accelerated by a series of accounting scandals at major companies such as BHS, the department store chain, and Carillion, the construction group.

In recent years, the FRC has handed out tens of millions of pounds in fines to audit firms and professionals for failings in their work on the accounts of dozens of companies, including Patisserie Holdings and Autonomy Corporation, the software group.

The groundwork for the FRC's abolition was laid by Sir John Kingman, the former Treasury mandarin, who proposed that ARGA should have much tougher powers.

A separate report by Sir Donald Brydon, a former chairman of Royal Mail Group and London Stock Exchange Group, demanded sweeping cultural and practical reforms to the audit industry.

A BEIS spokesman said: "We are currently in the process of appointing new directors to the board of the Financial Reporting Council, and will announce the outcome in due course."

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