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Deloitte comment letter on FCA consultation CP 14/18

Published on: 04 Nov 2014

We have published our response to the Financial Conduct Authority (FCA) consultation CP 14/18 Quarterly Consultation No 6. Our comments are limited to chapter 3 of the consultation, which deals with the application of the UK Corporate Governance Code by listed Companies. The most notable matter on which it consults is whether to update references in the Listing Rules and Disclosure and Transparency Rules to refer to the 2012 UK Corporate Governance Code (“the Code”) rather than the 2010 Code. In summary we suggest that:

  • the FCA should refer to the Code as issued by the FRC rather than any specific version. This would allow the Code to apply from the effective date specified by the FRC (in the case of the 2012 Code, periods commencing on or after 1 October 2012), rather than the 2012 Code, and remove the need for an FCA consultation each time the FRC updates the Code;
  • the FCA and Prudential Regulation Authority should work to update references elsewhere in a similar way, and if this is not possible, to refer to the 2012 Code. In the other parts of their rules changing the references from the 2010 to 2012 Code would have little or no practical effect, and having references to different versions of the Code in different rules is unhelpful for listed entities that are also regulated financial institutions; and
  • the FCA should consult sooner rather than later on the changes necessary for the 2014 Code. This would provide clarity to issuers and regulated financial institutions alike, and would also give the opportunity to remove the auditors’ review responsibilities for ten provisions of the corporate governance statement. These are now redundant as these areas are now subject to more explicit duties in auditing standards introduced with the 2012 and 2014 Codes; if this is not possible, then the FRC should be asked to update their materials supporting this review.

Further comments and full responses to all questions raised consultation are contained within the full comment letter which can be downloaded below. The original consultation document is available from the FCA website.

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