The FRC’s Three Year Plan: ARGA and Enforcement Refresh

The FRC has published its Annual Plan and Budget, Three Year Strategy (2025 – 2028), and Feedback Statement, providing insight into their future ambitions, from preparations for ARGA transition by 2028 to conducting a review on the E2E process of their enforcement procedures as early as Autumn this year.

Audit Reform and Governance Bill (“ARGA”)

Following the Government’s announcement in the King's Speech last year that ARGA was on the legislative agenda for the new government (see here), the FRC’s three-year strategy clarifies that legislative reform and transition to ARGA ‘should hopefully be a reality’ by 2028.

News of ARGA was ‘broadly welcomed’ by respondents to the FRC’s consultation on its strategy plan. However, the extent of ARGAs powers and the timeline for the transition remains unclear. The government is yet to undertake its impact assessment to determine whether the benefits of legislating are worth any associated burdens on business and press speculation continues to report that there is an inherent tension between serving the public interest while actively supporting UK economic growth, that may be driving amendments to the scope of the reforms behind the scenes.

The FRC clarify that they are ‘keen’ to work with stakeholders in the lead up to ARGA to ensure they give clarity to how they will operate under the new regime; however, the FRC note this can only be done once there is ‘legislative certainty’. The FRC are aware that stakeholders are keen to learn about how the FRC will use ‘any additional powers provided’ through ARGA, but the FRC confirmed it is not able to comments on possible powers while the legislation has not yet been drafted.

The FRC have confirmed that they intend to ‘consult in full on operating procedures once there is greater clarity’ and that ARGA’s regulatory regime ‘will be focused on those cases where there are serious breaches and a strong public interest element’.

FRC's Approach to Enforcement

Also noteworthy is that the FRC has commissioned an ‘E2E’ project, reviewing, consulting on and refreshing their ‘end-to-end’ enforcement processes, from identification of matters meriting investigation through to publication of outcomes. The FRC will start their consultation on changes to enforcement procedures in Autumn 2025.

The reports carry a recurring theme and commitment to timely investigation and enforcement action, which is marked as a key priority for the FRC; however, it remains to be seen what percentage of cases meet its 2-year and 3-year KPI in its 2025 Audit Enforcement Review, due to be published later this year.