The "Ghost of Reforms Past" returns as the Government shelves the Audit Reform Bill in a shock pivot toward "economic growth." With the birth of ARGA halted and director accountability measures on ice, the profession’s leading bodies including the ACCA and IIA are warning that prioritizing deregulation over governance could leave the UK’s reputation on thin ice.
It’s the news the City didn’t want, but many quietly expected. In a move that has sent shockwaves, though perhaps not surprises through the profession, the UK Government has officially scrapped the long-awaited Audit Reform and Corporate Governance Bill.
Despite appearing in the 2024 King’s Speech and being heralded as the definitive “fix” for the UK’s regulatory framework following the scars of Carillion, BHS, and Patisserie Valerie, the Bill has been unceremoniously shelved. The reason? A pivot toward “economic growth” and a desire to avoid “significant new costs” for large firms.
The backlash from the profession’s heavyweights was instantaneous. The sense of déjà vu is palpable; for many, this feels like yet another “false dawn” in an eight-year saga of legislative indecision.
Anne Kiem OBE, Chief Executive of the Chartered Institute of Internal Auditors (IIA), didn’t mince words:
“It is deeply disappointing that the Government has announced it will not be proceeding with the Audit Reform Bill that it promised it would deliver in the King’s Speech. We urge the Government to deliver good on its promise of putting the Financial Reporting Council on a legal footing with the powers to do its job effectively and to make this a priority.”
The IIA’s frustration is mirrored by the ACCA, who argue that the government’s logic of waiting for “peace time” to reform is fundamentally flawed. Maggie McGhee, Executive Director of Strategy and Governance at ACCA, believes the timing couldn’t be worse:
“Legislation to establish the Audit, Reporting and Governance Authority (ARGA) should have proceeded without delay… 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.”
The scrapping of the Bill means several high-profile changes are now off the table, or at least in a state of cryogenic suspension. Specifically, the headline-grabbing establishment of ARGA has been officially scrapped, and those high-stakes personal sanctions for directors the UK’s answer to Sarbanes-Oxley have been placed firmly on hold.
We are still holding out for the FRC to be put on a proper statutory footing the government says it’s promised, though they’re keeping the specific date close to their chest while the official focus shifts toward “reporting simplification.” We can expect a fresh consultation on that front to launch later in 2026 as the government attempts to prune back the very “red tape” they were previously looking to strengthen.
Business Minister Blair McDougall defended the decision in a letter to the Business and Trade Committee, suggesting that the “need for major reform is less pressing than it was.” The government points to the fact that audit quality has actually improved since 2018 under the FRC’s current tenure, despite its limited statutory powers.
Instead of a sweeping Bill, the government is shifting focus to the “modernisation of corporate reporting.” This essentially translates to streamlining disclosures and cutting “red tape” to keep UK markets competitive.
If there is one crumb of comfort for the FRC, it’s that the government still claims it will put the regulator on a proper statutory footing “as soon as parliamentary time allows.” This would finally grant the watchdog the power to gather information more effectively and fund itself through mandatory industry levies, rather than the current voluntary (and slightly awkward) “pensioner’s hat” approach.
For accountants on the ground, the message is clear: the radical overhaul we’ve been preparing for since the Kingman Review in 2018 isn’t coming. We are back to incremental change, “comply or explain” shifts in the Corporate Governance Code, and a regulatory landscape that looks remarkably like the one we already have.
