By Huw Jones
LONDON (Reuters) – Britain on Monday unexpectedly scrapped “burdensome” draft rules is has already put to parliament for approval just 13 weeks ago to apply lessons from the collapse of builder Carillion and retailer BHS.
The business and trade ministry said it wanted to cut reporting requirements on companies and keep London a globally competitive place to list.
The ministry proposed the rules in July to require company boards to explain in an annual “resilience” statement what are the main risks to their survival, and why they are confident about the quality and reliability of their corporate reporting beyond financial statements.
Carillion and BHS collapsed with little warning, with the former’s auditor, KPMG, fined a record 21 million pounds ($25.60 million) last week for failings in how it checked the builder’s books.
The government said it has withdrawn the rules, due to be approved in parliament, after consultation with companies raised concerns about imposing additional reporting requirements.
“Instead, the Government will pursue options to reduce the burden of red tape to ensure the UK is one of the best places in the world to do business,” the ministry said in a statement.
The collapse of Carillion and BHS prompted three government-backed reviews that recommended root-and-branch reform of auditing and corporate governance, including the improvements just scrapped by government.
The government has also yet to put forward legislation to create a more powerful audit policeman, a core recommendation from one of the reviews.
“The government remains committed to wider audit and corporate governance reform, including establishing a new Audit, Reporting and Governance Authority to replace the existing Financial Reporting Council,” it said on Monday.
“We will bring forward legislation to deliver these reforms when Parliamentary time allows.”
Business minister Kevin Hollinrake said the rules ditched on Monday will be replaced with a “more targeted, simpler and effective” framework.
“If companies are to have the certainty they need, it is vital that this reform and steps to enhance the competitiveness of the UK, are backed by political consensus,” said Julia Hoggett, CEO of London Stock Exchange plc, said in the ministry’s statement.
($1 = 0.8203 pounds)
(Reporting by Huw Jones, editing by Deborah Kyvrikosaios)