The departing boss of Standard Life Aberdeen is to become the stopgap chairman of Britain’s audit regulator as ministers seek a heavyweight figure to push through far-reaching reforms of the profession.
Sky News has learnt that the government is preparing to name Keith Skeoch as interim chair of the Financial Reporting Council (FRC) following the sudden departure of Simon Dingemans in May.
Sources said on Sunday that Alok Sharma, the business secretary, was likely to sign off and announce Mr Skeoch’s appointment later this month.
Keith Skeoch, departing boss of Standard Life Aberdeen
Mr Skeoch’s appointment comes at a critical time for the audit watchdog, which is grappling with the impact of the coronavirus crisis on the financial reporting of London-listed companies as well as its wider reform agenda.
The FRC recently confirmed plans to press ahead with the effective break-up of the big four auditors – Deloitte, EY, KPMG and PricewaterhouseCoopers – by forcing them to separate their audit and consulting operations.
Under its proposals, the quartet must submit detailed blueprints to the FRC during the autumn, with “operational separation” coming into effect in 2024.
The shake-up will represent a radical overhaul of the big four’s businesses, and has been sparked by public and political outrage over a string of audit failures at companies, such as Bhs and Carillion, which ultimately collapsed with the loss of thousands of jobs.
For the FRC, its latest leadership change also comes during a period of uncertainty about its own longevity.
Sir John Kingman, the former Treasury mandarin who now chairs Legal & General and Tesco Bank, proposed in a government-sponsored report last year that the FRC should be abolished and replaced by a statutory body called the Audit, Reporting and Governance Authority.
Mr Sharma has signalled his desire to implement the recommendations of Sir John and a separate review of auditing by the City grandee Sir Donald Brydon, although there remains uncertainty about the timetable for doing so.
The decision to appoint Mr Skeoch as the FRC’s interim chair may itself raise eyebrows, however.
He has been on the watchdog’s board since March 2012, meaning that he is within seven months of reaching the nine-year point at which the directors of listed companies are no longer deemed to be independent under the corporate governance code which the FRC oversees.
That would mean that if he remains in the interim role beyond March 2021, the FRC could face the awkward task of explaining why Mr Skeoch remains on its board.
He is also chair of the Investment Association, the London-based lobbying group which counts many of the world’s largest institutional investors among its members.
Insiders say that BEIS has made little progress so far in identifying a permanent successor to Mr Dingemans, with many appointments to public bodies being held up by both the COVID-19 pandemic and Downing Street’s desire to take a more active role in recruiting people to them.
The exit of Mr Dingemans came just months after he and Sir Jonathan Thompson, the new FRC chief executive, were installed in the posts.
The chairman’s departure followed a disagreement about the nature of any external appointments that he would be allowed to take alongside his FRC job.
In a statement in May, the regulator said: “As the chair of the Financial Reporting Council (FRC) is a part-time position, it was agreed as part of his appointment process that Simon Dingemans could take on additional roles provided they did not conflict with his responsibilities at the FRC.
“This has not proved possible and so it is with regret that Mr Dingemans has informed the board and the Secretary of State that he intends to step down from the FRC at the end of May.”
BEIS and Standard Life Aberdeen declined to comment on Sunday.