The FCA’ review, conducted in early 2020, looked at listed companies’ compliance with certain FCA rules relating to corporate governance. The FCA reviewed annual reports across several years for issuers across different listing segments and categories. The review highlights a number of areas for improvement including:

• That when stating how they have complied the Principles of the Code under Listing Rule (LR) 9, Premium listed issuers should ensure that that disclosure is sufficient to enable shareholders to evaluate how the Principles have been applied rather than just stating that they have been applied. Premium listed issuers are also encouraged to consider including specific details of how the company has applied the Principles in that accounting period with the use of examples and cross references where appropriate.
• Making use of cross references to other parts of the annual report and/or examples to evidence good corporate governance. The FCA found that for the premium listed population sampled, some of the disclosures appeared boilerplate and did not change year on year.
• The quality of Board Diversity Reporting.

Additionally the FCA observed that:

• Some closed-ended investment funds which had executive directors may have been erroneously using the exemption in LR 15.6.6R.
• A number of standard listed issuers either provided little or no information to meet the disclosure requirements of DTR 7.2.5R and DTR 7.2.7R.
• Standard listed issuers who state that they have applied the Provisions of the Code ‘as far as is relevant’ without providing any further detail do not appear to meet the requirements set out in DTR 7.2.3R (1).

The FCA has indicated that going forward it will work with the Financial Reporting Council (FRC) to consider areas for improvement. It will also use the results of its review to inform decisions about the deployment of future surveillance and monitoring efforts.

The full report is available on the FCA website.