The UK's business and trade committee declined to endorse Dame Jayne-Anne Gadhia, former chief executive of Virgin Money, as the next chair of the Financial Reporting Council (FRC). This marks the first time since pre-appointment hearings were introduced for the post that the committee has withheld approval for a candidate. MPs criticized Gadhia for not clearly stating her positions on crucial issues, including further audit reform, addressing competition within the audit market, and establishing the FRC on a statutory footing. Despite this, the committee stated she has the necessary competence and integrity for the role.
This decision puts Business Secretary Peter Kyle in a difficult position, as he must now decide whether to proceed with Gadhia's appointment despite the parliamentary committee's lack of backing. Under reforms implemented after the Carillion scandal, the FRC chair's appointment is subject to parliamentary scrutiny. The lack of endorsement raises questions about the future direction of the FRC, which continues to operate without several powers recommended by independent reviews, such as the ability to compel information during investigations. Previous candidates, Sir Jan du Plessis in 2022 and Simon Dingemans in 2019, both received explicit committee support.
The committee's stance comes amidst ongoing uncertainty surrounding the FRC's powers and structure, following years of delayed audit reform. Successive governments have promised to replace the FRC with a new statutory body, the Audit, Reporting and Governance Authority (ARGA), after high-profile corporate failures like BHS and Carillion. However, planned legislation for this reform has been repeatedly delayed and ultimately scrapped in January. This makes the leadership decision for the FRC particularly critical, as the organization's mandate and future capabilities remain unresolved.
