Press Round-Up: Regulatory and Professional Discipline - April 2022 - May 2022

Finance

Financial Reporting Council (FRC)

1. FRC publishes inspection key findings and good practices

On 27 May 2022, the FRC published their key findings and good practices following audit quality inspections at the seven largest audit firms.  

Their key findings ranged across thirty entities which were audited and across audit areas such:

• Taxation: “The audit team should have challenged and evaluated whether a further tax liability on a ‘receivable’ basis was only a remote possibility, given the potentially contradictory evidence”;  
• Revenue: “The audit team did not perform sufficient, appropriate procedures to address the risks of material misstatement in relation to X revenue”; and
• Going Concern: “There was insufficient evidence that the audit team assessed the ability of the lender to provide funding as and when required”.  

The good practices focused on the key aspects of the audit process, namely:

• Risk assessment and planning: Audit teams were commended for responding well to fraud risks, having early warning systems where significant concerns impacted on their willingness to continue to act as an auditor and well-executed ‘first year audit procedures’;
• Execution: Good practices for audit teams included robust challenges to the completeness and accuracy of disclosures made, detailed testing of various long-term contract adjustments and thorough engagement with component auditors; and
• Completion and reporting: Skilled audit teams used graphics in their reports to aid the communication of complex issues which required the exercise of significant judgement and provided detailed documentation supporting the review of the financial statements which clearly demonstrated the extent of their review and how review points arising were resolved.

2. FRC publishes ground-breaking report which finds Boardrooms must still do more to eradicate modern slavery

On 25 April 2022, the FRC published its report identifying significant shortcomings in the quality of companies’ modern slavery reporting. One in ten companies do not provide a modern slavery statement despite it being a legal requirement. Where companies did comply, only one third of these statements were considered clear and easy to read.

Section 54 of the UK Modern Slavery Act of 2015 requires businesses with a turnover of £36 million or more to write an annual statement, setting out the steps that they are taking to address the risk of slavery in their operations and supply chains.

 

Financial Conduct Authority (FCA)

3. FCA planning reform of the listing regime to boost growth and competitiveness

On 26 May 2022, the FCA published a discussion paper about the on-going overhaul of the branding and standards associated with companies listing in the UK. Currently companies have to choose between premium and standard listing segments; the plan is that only certain criteria must be met going forward, with listed companies choosing to opt in to further obligations.

Clare Cole, Director of Market Oversight at the FCA said:

‘The rules for companies who want to list here [London] have not changed since the 1980s. Now is a good time to have an open conversation to make sure our rules are fit for the future, so we have a more accessible, competitive and growing market that is attractive to a diverse range of companies.’ 

4. Half of investors would miss signs of screen sharing scam as FCA warns of 86% increase

On 5 May 2022, the FCA launched its latest ScamSmart campaign aimed to educate investors against sophisticated scams.

New research from the FCA has found that nearly half (47%) of investors would fail to identify a screen sharing scam, as it reveals an increase of 86% in cases in one year, with 2,014 cases and over £25 million in loses.

 

Healthcare

General Pharmaceutical Council - GPhC

5. GPhC Council agrees changes to the requirements for entry to independent prescribing courses

On 12 May 2022, the GPhC Council agreed to implement changes to allow pharmacists to begin independent prescriber courses when they have the relevant experience.

Currently pharmacists have to spend at least two years on the register before enrolling on a course. They were also required to have previous experience in a specified clinical or therapeutic area.

To meet the new requirements, the following conditions have to be met:

• Course providers will be required to assess the quality of the applicant’s previous experience, to make sure that pharmacists have the necessary skills and experience before starting the course;
• Applicants must identify an area of clinical or therapeutic practice on which to base their learning; and
• Pharmacy professionals must meet the learning outcomes specified in the accredited course before they can be annotated as an independent prescriber.

The implementation date for the changes will be confirmed once the GPhC Council has approved the guidance for course providers.

6. GPhC Council agrees a permanent rule change to allow the continuation of remote hearings

On 12 May 2022, after a 12-week consultation, the GPhC Council has agreed to a change in its rules to give the regulator express legal powers to continue to hold hearings and meetings remotely.

 

Nursing & Midwifery Council (NMC)

7. NMC publishes corporate strategy for 2022-23

On 10 May 2022 the NMC published its latest corporate plan setting out strategies for the next year. This comes half way through the NMC’s overarching corporate strategy for 2020-25.

The NMC stated that this latest plan will mark a shift away from focussing on the pandemic, and back to delivering their strategic plans. The key priorities highlighted in the plan include:

• Reducing their Fitness to Practise (FtP) caseload;
• Regulatory reform (in line with the Government’s drive to modernise);
• Promoting equality, diversity and inclusion (EDI); and
• Supporting midwifery and nursing professionals to provide safe, kind and effective care.

The corporate plan for 2022-23 can be found here.

8. NMC consultation on English language requirements

This month the NMC is set to launch a public consultation on their English language requirements, and whether they should relax the same. The NMC currently accepts IELTS and OET English language tests.

The consultation will look into two things: their approach to English language tests; and whether they should accept alternative evidence to satisfy the English language requirement. In their announcement in May, the NMC listed the following examples of possible alternative evidence: employer references, evidence of unregulated work in a healthcare setting in the UK, and postgraduate qualifications taught and examined in English.

The consultation will run for eight weeks. Further information about the consultation is expected to be published by the NMC shortly.

 

Health & Care Professions Council (HCPC)

9. HCPC’s Council approve new Equality, Diversity and Inclusion action plan

On 4 April 2022 the HCPC announced that it will be launching its first Equality, Diversity and Inclusion (EDI) action plan.

The plan will set out the actions the HCPC will take in the next four years including new EDI objectives, with the aim of HCPC upholding and promoting best practice in EDI.

The EDI action plan was approved by HCPC’s Council in April. The HCPC is encouraging registrants to complete the diversity information and monitoring form on their online account to assist the HCPC in addressing the fairness and discrimination issues that impact registrants and service users.

 

Legal

SRA

10. Updated plans on financial penalties following consultation feedback

On 23 May 2022, the SRA announced the next steps following a consultation on their approach to issuing financial penalties to law firms. Key considerations include:

• Taking into account the turnover of firms and financial means of individuals when setting fines;
• The maximum fine that can be issued will increase from £2,000 to £25,000;
• For cases involving sexual misconduct, discrimination or any form of harassment, restrictions on practice, suspension or strike off will now be considered the more appropriate sanction; and
• Introducing a schedule of 'fixed penalties' for lower-level breaches (for example, failures to comply with requests for information or requirements under the SRA Transparency Rules.)  

Anna Bradley, SRA Chair confirmed, “In terms of both fines and fixed penalties, solicitors and firms would retain the right to appeal any outcome or penalty imposed at the SDT.”

11. SRA publishes first ethnicity pay gap report

On 28 April 2022, the SRA published their first ethnicity pay gap report showing the difference between mean and median hourly pay received by White staff and staff from a Black, Asian and minority ethnic background. Unlike gender pay reports, there is no obligation currently to publish ethnicity pay gap data, however, law firms are being encouraged to follow suit.

Paul Philip, SRA Chief Executive said:

‘Our data shows that we have a long way to go. Although we have good ethnic diversity in our workforce, we don’t when it comes to diversity in senior positions. That isn’t acceptable. […] In the coming months, we will develop an action plan and will start a programme of work to better understand the reasons behind the low representation of staff from a Black, Asian and minority ethnic background in senior positions, and what new measures we can take to address the problem.’