Commenting on the Financial Reporting Council’s ‘Developments in Corporate Governance and Stewardship’ report, Oliver Parry, Senior Corporate Governance Adviser at the Institute of Directors said:
“Overall, we welcome the progress made by companies in implementing and complying with the 2012 amendments to the Code.
“Over 94 per cent of FTSE 350 companies complied with all, or all but one or two, of the Code’s main provisions. Less encouraging is the apathy shown by asset managers in respect of the Stewardship Code. We are concerned this is turning into a black hole. No review of the Stewardship Code was issued this year, despite clear warning signals that it wasn’t working as effectively as it should have been.
“Although the FRC does not have the power to regulate compliance with the Stewardship Code, it is now clear that something should have been published alongside the consultation into the UK Corporate Governance Code, issued in April this year. In the context of the Kay Review, and given the clear signs that short-termism is still endemic in the market, the FRC should consider this an absolute priority this year and next.
“Moreover, we have concerns about the frequency with which the FRC consult on the Code. Companies and preparers of accounts have only just got to grips with the 2012 revisions. And yet, less than 2 years later, they are facing another consultation. By the time companies have got to grips with the 2014 Code, the FRC will just be about to embark on yet another consultation round of the Code (in 2016). There is an argument to push consultations back to once every three or four years, barring exceptional issues emerging within the UK market.”