Category: 0 Reviewed

The government today (17 April 2018) launched an independent review of the Financial Reporting Council (FRC), the regulator for auditors, accountants and actuaries.

The review will be led by Sir John Kingman, who has extensive private and public sector experience. He will be supported by an advisory board which he will convene.

The root and branch review, due for completion by the end of 2018, will assess the FRC’s governance, impact and powers, to help ensure it is fit for the future.

The review aims to make the FRC the best in class for corporate governance and transparency, while helping it fulfil its role of safeguarding the UK’s leading business environment.

The review follows the announcement of Andrew Tyrie as the recommended new head of the Competition and Markets Authority, demonstrating the government’s determination that markets and the economy are working for consumers.

Business Secretary Greg Clark said:

The UK has a strong reputation as a dependable place to do business but this needs to be continuously updated and it’s important to ensure all of our regulators continue to drive high standards.

I am pleased to appoint Sir John who has a rigorous approach to bring to bear in leading this comprehensive review of the Financial Reporting Council. This review is part of the government’s Industrial Strategy aim of creating a business environment that ensures our regulators are fit for the future and our markets are working for consumers.

The review will include a consultation, asking for views on the FRC’s role in the British economy.

Read the Terms of Reference.

International Development Secretary Penny Mordaunt will join President Kenyatta of Kenya to open trading at the London Stock Exchange today (17 April 2018) where she will praise the critical role financial markets play in supporting prosperity and growth across the Commonwealth – and welcome a new partnership between the London Stock Exchange and the Nairobi Securities Exchange.

Ms Mordaunt will unveil a partnership package between the Bank of England and central banks in Sierra Leone, Ghana and South Africa to share expertise, improve regulation and reduce the risk of bank failures. Expert Bank of England staff will help central banks develop sustainable financial systems that power local and regional growth, job creation and investment opportunities.

She will also announce UK funding to help developing countries raise investment from global capital markets in their own currencies, promoting investment and job creation.

International Development Secretary Penny Mordaunt said:

Healthy financial markets create opportunities for new investment, trade and jobs, playing a critical role in delivering the global prosperity that benefits us all.

What’s more, financial markets open the door to a future free from aid dependency. By building partnerships, sharing knowledge and opening up markets across the Commonwealth, we can defeat poverty, boost trade and investment, and deliver on the ambitions of countries that want to stand on their own two feet.

Dr Ernest Addison, Governor of the Bank of Ghana, said:

The Bank of Ghana is happy to be part of this technical cooperation programme with the Bank of England. We envisage benefitting from the Bank of England’s experience in dealing with financial stability and macroprudential regulation, to assess the full implications of macro issues on the financial system.

Joanna Place, Chief Operating Officer at the Bank of England said:

The Bank of England is excited to be embarking on this new partnership with the Bank of Ghana, the Bank of Sierra Leone and the South African Reserve Bank. In our increasingly interconnected global financial system, cooperation between central banks is critical to providing the financial stability on which all our citizens rely.

We look forward to supporting our counterparts in delivering their priorities in building this essential foundation for growth.

Ms Mordaunt will also welcome the launch of the Commonwealth Digital Finance Champions Group. By sharing expertise and knowledge, the Group will drive innovation to improve financial access for the most vulnerable and underbanked people in societies – for example, exploring ways to reduce the cost of sending remittances. The UK, Kenya, Ghana, Jamaica and Rwanda have all confirmed they will be founding members of the group.

Joe Mucheru, EGH, Cabinet Secretary for the Ministry of Information, Communications and Technology of Kenya said:

Kenya is hailed globally for its early and successful adoption of mobile money. The recent launch of mobile money interoperability in the country will contribute towards bridging the remaining margin to achieve total financial inclusion for all Kenyans.

I encourage the Commonwealth community to explore the potentials of applying cutting edge technologies such as blockchain for distributed ledgers and artificial intelligence as this can enhance public service delivery and boost economic growth, particularly for developing economies such as Kenya.

The event marks the second day of the Commonwealth Heads of Government Meetings – bringing together business, civic society and government leaders from across the 52 Commonwealth nations in London for a week of events, forums and discussions.

Notes to Editors

Central Bank Partnership announcement

• The Bank of England will establish technical assistance partnerships with central banks – initially in in three Commonwealth countries at different stages of development: Sierra Leone, Ghana, and South Africa.
• The UK will provide up to £2 million for tailored technical assistance, provided by expert Bank of England staff, across a range of central bank functions. In South Africa, focus will be given to the important financial hub role played by the country across southern Africa.
• These partnerships will share expertise across the Commonwealth, improving the regulation and supervision of financial sectors and mitigating the risk and severity of economic recessions due to bank failures and crises.

Local Currency Bonds announcement

• Access to finance is fundamental to driving growth in developing countries, but when companies seek finance abroad it is most often in foreign currencies – meaning companies take on the risks associated with potential negative currency movements. This leads to underinvestment, hampers job creation, and can lead to volatile prices for consumers.
• Today’s £5 million announcement to support and work with developing countries will help them raise local currency finance through the London market. This will include technical assistance to help address regulatory barriers to issuing local currency bonds in London and other global financial centres.
• The demand-driven support package will help countries such as Nigeria, Pakistan and Ghana to benefit from increased access to international finance, by:
• Identifying key regulatory and political barriers to accessing local currency bonds;
• Identifying and building commitment of key public authorities;
• And providing advice on regulatory reform.

Digital Finance Champions Group announcement

*The UK is partnering with Commonwealth countries with ambition around digital finance, to share knowledge and expertise on how to transition to a digital economy in an inclusive and sustainable way. The inaugural meeting of the Group will take place in Q3 of 2018, where the founding members – including the UK, Ghana, Kenya, Jamaica and Rwanda – will agree on priorities and identify where support is needed.
* Possible areas of collaboration and support include:
* Implementing initiatives to bring down the cost of remittances – at an average of 8.4%, the cost of sending remittances in Commonwealth corridors is higher than the Global Goal target of 3%;
* Reducing costs and cutting down on corruption by digitising government payment systems;
* Implementing the new Guidelines for Investing in Responsible Digital Finance, which have been developed by CDC, the IFC and Goodwill.

Partnership between London Stock Exchange and Nairobi Securities Exchange

• Today the London and Nairobi Exchanges have signed a Letter of Understanding with FSD Africa, a DFID-funded NGO based in Nairobi focused on financial sector development in Africa.
• With support from FSD Africa, the two exchanges aim to bring the ‘Elite’ SME development programme, to East Africa.
• More info on FSD Africa is available at: www.fsdafrica.org, and on the Elite programme at: www.lseg.com/elite.

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International Development Secretary Penny Mordaunt will today highlight the important role that science, innovation and the City of London can play in helping developing countries build resilience against and recover after natural disasters.

At an event at Lloyd’s of London Ms Mordaunt will join Dame Inga Beale, CEO of Lloyd’s of London, to showcase how science and technology are powering the design of innovative financial products which are helping developing countries recover more quickly after extreme climates and disasters.

At the event – held on the first day of the Commonwealth Heads of Government Meetings this week – Ms Mordaunt will announce:

• A package of support to the Caribbean to help prepare for future disasters and explore how innovative finance products can provide much-needed pay-outs quickly, to help speed up the recovery of businesses and critical services, like hospitals, power and schools.
• An increase in continued support to the Pacific disaster risk insurance pool (PCRAFI) following the disaster wreaked by Hurricane Gita in Tonga last year, to strengthen its proven ability to pay out following future disasters.

Ms Mordaunt will also reflect on the progress of Global Parametrics, a UK aid-backed social enterprise that is using cutting-edge climatic, seismic and financial risk modelling to build products that make a real difference when natural disasters hit. This includes a recently launched facility with its first client, VisionFund, which will help 4 million people access crucial finance to rebuild their lives and businesses in the wake of natural disasters.

Speaking ahead of the event International Development Secretary Penny Mordaunt said:

Last year Hurricanes Irma and Maria showed once again the destruction extreme weather events can cause – and the devastating effect this can have on the lives of families and communities.

When disaster does strike, it is crucial that finance is easily and quickly available to help people rebuild their homes and livelihoods. The use of science, real-time data and innovative finance can be game-changing – helping to cut response times and get countries back on their feet faster.

Dame Inga Beale, CEO of Lloyd’s of London said:

Insurance exists to provide critical support in times of disaster, enabling quick recovery and economic protection. Sadly, many of the world’s most vulnerable countries also have the biggest protection gap, meaning that recovery is slow and costs so high that rebuilding takes significantly longer.

Lloyd’s has worked in partnership with the Department for International Development to co-sponsor the Global Centre for Disaster Protection’s first Innovation Lab focussed on developing new financial instruments that combine incentives for resilience with risk transfer. This initiative is part of a collaborative effort to help mitigate the devastating and long-term economic and social impacts of disasters most keenly felt by developing nations around the world and across the Commonwealth.

The International Development Secretary will also announce a partnership with the Met Office and the World Bank to strengthen weather forecasting systems and deliver new technologies and innovative approaches to help vulnerable communities use climate warnings and forecasts to better prepare for shocks across Asia.

International Development Secretary, Penny Mordaunt said:

Changing global climates will impact all our lives, but can have deadly consequences for the world’s poorest people. By improving the use of forecasting information such as early-warning systems, and sharing the Met Office’s world-leading expertise, we can help governments and communities prepare for these shocks, so fewer lives are lost each year to extreme weather.

Professor Stephen Belcher, the Met Office Chief Scientist, said:

The Commonwealth brings together a rich heritage and shared cultural values. But these aren’t the only common bonds linking member states. Each is also inextricably connected by the shared impacts of weather and climate. Improving resilience and forecasting will provide a lifeline for vulnerable communities helping them to cope with weather and climate shocks through measures which improve food security and provide protection from extremes of weather.

There can surely be no better aspiration than sharing cutting edge climate science to improve the fortunes and prospects of people in their day-to-day lives.

The Commonwealth Heads of Government Meetings take place this week in London, bringing together representatives from business, civil society and government from across the Commonwealth.

Notes to editors

Caribbean – Package to strengthen resilience

• Following the devastating impact of last year’s hurricane season, DFID is announcing up to £19m of additional support for Caribbean countries to strengthen capability for early recovery at a regional and national level, and to work with countries to develop options to strengthen disaster preparedness and financial resilience.
• This will be the highest priority of our new Centre for Global Disaster Protection in 2018. The Centre for Global Disaster Protection brings developing countries together with partners including the UK Government, the World Bank, civil society and the private sector with the shared goal of enhancing resilience to climate and disasters. The Centre works with governments to strengthen disaster preparedness, embed early action and enhance their financial resilience, including through the use financial tools like insurance.
• In January, the Centre ran its first Innovation Lab in partnership with Lloyd’s of London to explore how innovations in finance could help countries to build back smarter after disasters. The event brought together more than 50 people from across the finance, humanitarian, engineering and development sectors. A first report by Risk Management Solutions, Vivid Economics and re:focus partners on the outcomes of the Lab will be available from today (16 April 2018).

Asia – Regional Resilience to a Changing Climate programme

The UK will provide up to £23.5 million through the Met Office (£12 million), World Bank (£10 million), and activities directly executed by DFID (£1.5 million) over four years. The programme will deliver:

• At least ten pilots of new technologies and innovations to deliver climate information and advice to vulnerable groups of people;
• One regional and four sub-regional forecasting and early-warning systems, to provide targeted information on the impacts of weather events such as floods and storms;
• Improved access for 30 million people to climate information, services and early warning systems;
• Three regional bodies established to deliver seasonal and long-term climate projections and analysis;
• And will mobilise additional resources for building climate and environmental resilience from national, international and private sector sources.

Uplift to Pacific disaster risk insurance pool (PCRAFI)

• The UK is providing a further £1.3 million to the PCRAFI, in the wake of major devastation to Tonga following hurricane Gita on top of £6.2 million of capital already provided.
• At the Commonwealth Summit in 2015 the Prime Minister announced £15 million to help extend an international disaster risk insurance fund to the Pacific Islands.
• In February this year, Tonga, Samoa and Fji were hit by Cyclone Gita. Gita was particularly severe when it hit Tonga and there was widespread damage. The nation’s parliament building was amongst the buildings destroyed.
• Tonga is one of 5 Pacific nations that has disaster risk insurance in place with PCRAFI, thanks to UK support. The Government of Tonga received £2.8 million ($3.5 million) within 10 days of being hit, which helped speed recovery.

Global Parametrics

• Global Parametrics is a UK social enterprise – started with funding from DFID and KFW – with a focus on using cutting-edge climatic and seismic risk modelling to offer financial products that improve recovery and resilience in the event of natural and climatic disasters
• DFID has invested £1.5m into Global Parametrics. In addition, DFID has also provided a loan of £6.4m.
• Global Parametrics products are backed by the Natural Disaster Fund. Like an insurer, the Natural Disaster Fund collects premiums and makes pay-outs when natural disasters occur.
• DFID has invested £25 million in the Natural Disaster Fund over 20 years, in order to support pioneering new products from Global Parametrics.
• Global Parametrics has partnered with microfinance institution VisionFund to launch the world’s largest non-government climate insurance scheme.
• The scheme will provide automatic disaster-linked pay-outs to microfinance institutions in Kenya, Malawi, Mali, Zambia, Cambodia and Myanmar, allowing them to provide new loans to allow families and small businesses to get back on their feet after a disaster.
• DFID made £2m available to finance disaster recovery loans by VisionFund during last year’s El Nino. Following loan repayments, DFID was able to reinvest all of that that money in other development projects

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