Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
The government has confirmed it will not proceed with primary legislation to reform the UK audit sector and corporate governance standards this session.
Minister for small businesses and economic transformation Blair McDougall informed the Business and Trade Committee of the decision in a letter dated 19 January 2026. The move halts the creation of the Audit, Reporting and Governance Authority (ARGA), which was intended to replace the Financial Reporting Council.
McDougall stated that the government’s priority is to promote economic growth and reduce administrative burdens on firms. He noted that while the planned reforms would be beneficial, they would increase costs on business at a time when ministers are prioritising deregulatory measures.
The Association of Chartered Certified Accountants (ACCA) expressed disappointment regarding the lack of progress. The professional body argued that the delay could undermine trust in the UK as a global financial centre.
The government also suggested the need for major reform is less pressing than it was following the collapse of Carillion in 2018. McDougall highlighted that audit quality and regulation have improved significantly since that period.
Officials now intend to focus on a consultation to simplify and modernise corporate reporting later this year. The minister said the government still aims to put the Financial Reporting Council (FRC) on a statutory footing when parliamentary time allows.
Maggie McGhee, executive director – Strategy and Governance, ACCA, said: “Legislation to establish the Audit, Reporting and Governance Authority (ARGA) should have proceeded without delay. Over the years ACCA has been consistent in that. Establishing ARGA would have given businesses certainty and ensured the UK maintains its reputation for the highest standards of corporate governance.
“We cannot hide our disappointment and our disagreement with this decision which we think makes no sense. The time to reform and strengthen corporate governance is when we are in a relatively good place, not when we are in the midst of a corporate governance and audit failure crisis. So we disagree completely with the idea that the need for reform is less pressing. Businesses do not grow where corporate governance is below par.”
She added: “‘We will work with other stakeholders and the government to see that the FRC works as well as possible. The first step is for the government to do what it has said and put the FRC on a proper statutory footing. Please stop the delay now.”
