Regulators

FRC reports record financial sanctions of £46.5m in past year

The FRC stated that non-financial sanctions are becoming “increasingly sophisticated” with a focus on tackling the underlying causes of failure in order to reduce the risk of recurrence.

The Financial Reporting Council (FRC) has announced its annual enforcement review which revealed it resolved a record number of cases in the last year and also imposed record financial sanctions of £46.5m.

The report revealed the total financial sanctions, up from £16.5m in 2020/21, reflects the “seriousness and high” number of cases concluded. It also reflected the FRC’s growing capability to take on the large and complex cases which has become an increasingly prominent feature of its work, supported by a 23% growth in the enforcement division’s team. 

The FRC also revealed that the increased focus on non-financial sanctions has continued. It stated that non-financial sanctions are becoming “increasingly sophisticated” with a focus on tackling the underlying causes of failure in order to reduce the risk of recurrence.  

The FRC said “while progress in this area has been slower than hoped”, it has improved in areas including self-reporting, comprehensive admissions and proactive steps to address the causes of matters self-reported. 

Elizabeth Barrett, the FRC’s executive director of enforcement, said: “High-quality financial reporting and audit are vital to provide users of financial statements with confidence in the accuracy of those statements and to uphold trust in corporate Britain.

“The level of financial sanctions imposed in the year underscores the important dissuasive role they continue to play, while the further increase in the use of bespoke non-financial sanctions reflects the ongoing emphasis placed on identifying the underlying causes of failure and affecting long term positive change. Such sanctions play a key part in our role as an improvement regulator.”

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