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QCA publications and policy updates

This section of the Directors’ Knowhow features all of the publications produced by the QCA and any relevant updates that have occurred over the last month.

QCA/YouGov sentiment survey

The results of the most recent QCA Small & Mid-Cap Sentiment Index were released in May following the survey by YouGov between 9 April and 5 May 2021. The survey provides insight into how small and mid-sized quoted companies have fared in the last year and how they view their prospects for the year ahead. In total, we received 131 responses from small and mid-cap UK quoted companies (103) and advisory firms (28).

In this edition, optimism was at its highest level in the 10-year history of the survey. This includes optimism about prospects for the UK economy, as well as for own business prospects. The key findings include:

  • Overall 79% of respondents were optimistic about the UK economy’s prospects and 94% believed their own companies would see improvement performance;
  • Company directors believe their turnover will increase by an average of 20% in the next year and their workforces will increase by an average of 9.6%; and
  • Both of these figures also represent record highs.

In terms of capital raising:

  • Fewer businesses are considering doing so over the next 12 months. The proportion of businesses considering raising capital is at a 2 year low;
  • There has also been a shift in companies’ preferences regarding how they would raise capital; and
  • Bank finance saw a greater increase in preference than any other type of finance and companies saw this as being significantly easier than was the case in Q4 2020.

To read the full survey results, please click here.

QCA meeting with Lord Callanan

As part of our response to the BEIS consultation on audit and corporate governance reform, the QCA has engaged with officials from HM Treasury, BEIS and the FRC. In addition to this, on 24 May, we held a roundtable with Lord Callanan, BEIS Minister for Corporate Responsibility, who is leading on the consultation. The meeting was attended by members of the QCA’s Board, Expert Groups and policy team.

The meeting provided the QCA with the opportunity to express views and highlight concerns to the Minister. In particular, we discussed the proportionality issues associated with the proposed definition of Public Interest Entities (PIEs), as well as the potential impact on growth and opportunity within the small and mid-cap ecosystem. 

Overall, the Minister was receptive to the issues we raised, and we will seek to contine to engage with the Minister and other officials throughout the rest of the consultation period. 

Reports, guides and regulation

This section features some of the key legislative/regulatory developments and changes, as well as any new reports or guidance issued by industry bodies or regulators, over the last month.

Regulator’s publish regulatory initiatives grid

On 7 May 2021, the Financial Services Regulatory Initiatives Forum published the third edition of the Regulatory Initiatives Grid. The grid is published twice a year jointly by the Bank of England, FCA, CMA, Payment Systems Regulator, Pensions Regulator and the Information Commissioner’s Office, as well as, for the first time, the FRC. HM Treasury attends the forum as an observer member. The grid includes upcoming regulatory activity that may have a significant impact on stakeholders within the financial services industry aims to help strengthen coordination between the regulators.

The latest version of the grid includes multiple new initiatives concerning ESG, HM Treasury’s Future Regulatory Framework Review and the FCA’s work to transform data collection.

To view the grid, please click here.

UKEB receives delegated powers

On Friday 21 May 2021, the Secretary of State for Business, Energy and Industrial Strategy (BEIS) delegated statutory powers to the newly established UK Endorsement Board (UKEB). Under its delegated functions, the UKEB will play a key role in influencing the development of international financial reporting standards (IFRS) and is responsible for the endorsement and adoption of IFRS for use by UK companies.

The legislation required to formally establish the UKEB was passed in April 2021. The UKEB will report to the Secretary of State for BEIS on technical matters and to the Financial Reporting Council (FRC) on its governance and due process procedures. Following the appointment process led by BEIS, Pauline Wallace was appointed Chair in September 2020 and inaugural UKEB Board members were appointed in March 2021.

To read more about the UKEB’s delegated statutory powers, please click here

New powers for Insolvency Service

In May, the Insolvency Service was given new powers to investigate company directors who dissolve their businesses. The new powers have been granted in a bid to act as a deterrent against the misuse of the dissolution process and close a legal loophole.

The process will no longer be able to be used as a method of fraudulently avoiding repayment of Government backed loans given to businesses to support them during the Coronavirus pandemic. Extension of the power to investigate also includes the relevant sanctions such as disqualification from acting as a company director for up to 15 years. These powers will be exercised by the Insolvency Service on behalf of the Business Secretary.

To read more about the new power, please click here.

FRC on the need for high quality disclosures

On 18 May 2021, the FRC published a report on a thematic review of interim reporting. The report highlights areas where the FRC found examples of good practice, as well as suggests ways that interim reporting could be improved further in the future.

Overall, the report finds that companies have taken on board the recommendations contained in previous iterations of the FRC’s thematic reviews. It also finds that companies have heeded to the recommendations in the joint statement by the FCA, FRC and PRA on corporate reporting during Covid-19.

The report finds that companies have made improved disclosures in relation to going concern and the statement of cash flows and related notes. Most of the companies included within the sample also provided detailed explanation of their use of Alternative Performance Measures.

In terms of the areas for improvement, the FRC identified that there needed to be better and clearer explanations of balance sheet movements and the impact of significant events on financial statements. The FRC states that companies should:

  • Include reasons for impairments and quantify the key assumptions used in the impairment assessments.
  • Include an update of the IAS 1 ‘Presentation of Financial Statements’ estimation uncertainty disclosures.
  • Include a breakdown of the components of the tax charge and the deferred tax balance by category of temporary difference.
  • Update the relevant information disclosed in the last annual report by following the applicable disclosure guidance of individual IFRSs.

To view the report, please click here.

FRC on workforce engagement

On 24 May 2021, the FRC published a report, Workforce Engagement and the UK Corporate Governance Code, which reviewed company practice and reporting. The report highlights examples of productive workforce engagement and good practice. The case studies included in the report set out innovative approaches that could be applied more widely.

The examples of good practice identified in the research shows how the exact mechanism of engagement is less important than companies’ desire to genuinely engage with employee views and recognise the benefits that such engagement can bring.

The report finds that, of the three core options for workforce engagement in the revised UK Code, 68% of the firms surveyed had adopted one or more of these (40% had adopted a designated NED, 12% had established an advisory panel and 16% had combined an advisory panel and designated NED. The remaining 32% that had not adopted the suggested option either chose to adopt alternative arrangements or believed their existing arrangements were adequate to satisfy the Code.

The key recommendations put forward in the report that the FRC believe companies give particular attention to:

  • Representativeness and breadth of coverage – ensuring that the employee voice reflects the geography and demography of the workforce.
  • Depth of coverage is also crucial – properly integrating different engagement and voice channels with each other, including collective forms of employee representation.
  • Provide for regular and structured input from the workforce, especially during periods of rapid change.
  • Workforce representation – whether sitting on a panel or as worker directors, representatives should be chosen with some input from the workforce.
  • The substance of workforce engagement – is where energies should be principally focused on, not the process.
  • Agenda setting – this is best when there is a balance between topics of management interest and topics of workforce interest.
  • A meaningful dialogue with the workforce also requires an effective feedback loop, based on informed employee voice.

If you wish to view the report, you may do so here.   

Surveys, projects and questionnaires

This section features surveys or questionnaires submitted by industry bodies or regulators that are relevant to small and mid-size quoted companies. 

FCA Climate Adaptation Report – Net zero survey

In H2 2021 the FCA will publish its inaugural Climate Adaptation Report. The Report will provide an overview of the FCA’s climate change strategy and examine climate change risks and opportunities across regulated sectors.

The Report will also specifically consider how regulated firms are aligning their activities with the transition to ‘net zero’ carbon emissions, including the role of alliances, tools and targets, and any challenges faced by firms. This is in line with the FCA’s latest remit letter from the Treasury, which formally brought consideration of net zero into the FCA’s remit as a financial regulator.

To support their Report, and shape their approach to respective policy and supervisory strategies regarding firms’ net zero commitments, the FCA is seeking information on the current status of progress towards net zero in the issuers sector.

The FCA notes the efforts underway across the industry to align firms’ activities with the transition to net zero. To assist their analysis of the current status of such efforts, the FCA has developed a survey. Importantly, the survey should not be read as a formal supervisory information request. Nor should it be read as setting any new supervisory expectations regarding firms’ net-zero-aligned activities. We encourage firms to complete the survey and return responses to the QCA by 18 June 2021. Responses will then be passed to the FCA.

Survey responses will not be published, and individual firms will not be named in the final Report. Any supporting information included in the Report will be anonymised and aggregated.

To complete the survey, please click here..

Once you have completed the survey, please email it to

FRC Lab electronic reporting survey 

Last year the FCA delayed the mandation of Disclosure and Transparency Rule 4.1.14, which introduced a requirement for companies on a regulated market to publish annual reports in XHTML format. 

Whislt the majority of companies opted not to produce XHTML accounts for 2020, a number did. The Lab is seeking to understand the readiness of companies and providers for XHTML for 2021, as well as the experiences of those who have already trailed or published XHTML annual reports. We are also keen to hear from investors and other potential users of the data. 

The survey should take around 10 minutes to complete.

If you wish to take the survey, please click here


This section provides an update of any recently submitted QCA consultation responses, as well as the consultation responses the QCA is currently drafting.

QCA policy consultation responses

The QCA’s Accounting, Auditing and Financial Reporting Expert Group contributed to our response to the BEIS consultation on requiring mandatory climate-related financial disclosures.

To view the response, please click here.

The QCA’s Share Schemes Expert Group contributed to our response to HM Treasury’s consultation on Enterprise Management Incentives.

To view the response, please click here.

The QCA is seeking views on the below consultation(s):

  • BEIS: Restoring trust in audit and corporate governance

    • On 18 March, BEIS published its consultation on the three audit-related reviews, Restoring trust in audit and corporate governance. The consultation distils the 155 recommendations included within Sir John Kingman’s review of the FRC, Sir Donald Brydon’s review of the quality and effectiveness of audit and the CMA’s market study on statutory audit. (Deadline: 8 July)

  • FCA: Changes to UK MiFID’s conduct and organisational requirements

    • This consultation covers two areas to the conduct and organisational rules in UK MiFID: research and best execution reporting. The proposed changes aim to reduce compliance costs without compromising high standards of investor protection. As part of the consultation, the FCA is proposing to create an exemption for SME research below £200m provided the research is offered on a rebundled basis or for free, as well as a proposal to establish an industry-led initiative to fund research for SMEs.

  • IASB: Third Agenda Consultation

    • The consultation is seeking views on what the Board’s priorities should be over the next five years. In particular, they would like to hear views on: the strategic direction and balance of the Board’s activities; the criteria for assessing the priority of financial reporting issues that could be added to the work plan; and new financial reporting issues that could be given priority in the Board’s work plan.

If you have any comments you wish to contribute to the above consultation(s), please get in touch with Jack Marshall, Senior Policy Adviser,

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