We have reviewed the collapse of BHS here in Financial Regulation Matters , whilst we have also reviewed the performance of the Financial Reporting Council (FRC) here . We also looked at a number of investigations that the FRC were undertaking with regards to the audit sector, with the regulator’s record fine against PwC for its auditing of BHS being one of the more recent actions taken. However, what looks like a victory for the regulator, at first glance, is quickly becoming anything but, and in today’s post we shall look at the sentiment of the regulators actions in this case. When the announcement was made that PwC would be fined, and one of its partners involved in the audit banned for life, it was suggested by the regulator that they would be releasing an extensive report into what went wrong . However, Sir Philip Green initiated legal proceedings to amend, and essentially delay the report from being published on the grounds that it would negatively affect members of h...

House of Fraser, the massive department store that began in 1849, in Glasgow, has been making the business headlines for quite some time. After the collapse of BHS, House of Fraser stands on the brink of being the next massive feature of the British High Street to fold. In this post, we will look at the latest developments as the company battles to stay in existence and survive the hostile environment facing High Street retailers, whilst we will also look at the what these developments many mean for the future of British retailers as we continue to move through the economic cycles. The news of House of Fraser’s troubles broke earlier in the summer , which came on the back of negative financial results last year which detailed that the company had made a net loss of £37 million, with a £53 million drop in revenue . Those financial troubles led to the need to develop a rescue plan to protect the company from the hostile environment within which they operate, and in June of this ye...

The last post of Financial Regulation Matters looked at the then-ongoing crisis at Carillion ; now we know that the firm could not survive the crisis , with the situation being that an official receiver was appointed to liquidate the company immediately . Whilst this author is not of the habit of agreeing with Andrew Adonis, his recent likening of the situation to the Enron scandal , in terms of the extent of the scandal and who it will ensnare as it develops, seems to be an accurate depiction; our old friends KPMG are currently being scrutinised for providing positive audits just months before the firm spectacularly collapsed – no doubt, many financial (and political) players will be implicated as this remarkable corporate collapse continues to come to light. However, whilst Carillion and the collapse will be revisited in this blog and, no doubt, fill the business media for weeks to come, this post will take a different approach and use the story to better understand a different...

Here in Financial Regulation Matters and across the U.K., with regards to those concerned with Corporate Governance, the collapse of the large retailer British Home Stores (BHS) has been a cause of great debate, and even greater consternation. The ease with which the company fell, and the sheer arrogance of those who caused it, led to Parliamentary investigations and a number of increasingly damning investigations from Journalists, academics, and commentators. In February, in one of the first posts here in Financial Regulation Matters , we looked at the calls to make private companies abide by the Financial Reporting Council’s Corporate Governance Code (which is aimed at Public Companies only), whilst later we also looked at the calls to enforce the implementation of workers and stakeholders’ interests at Board level, together with the proposed binding-quality of shareholder votes when it came to Executive compensation. If we take a look back into the archives of posts, a growing...

This very short post is based on the news today that Sir Philip Green has, according to the general sentiment being displayed, delivered on his pledge to ‘sort’ the pensions crisis that had developed in the wake of the British Home Stores (BHS) collapse. In putting £363 million into a Special Purpose Vehicle , thereby allowing 19,000 employees of the failed high street giant to be put in a position, in relation to their pension, that they would have been in had BHS not collapsed, which is around 10-15% higher than they would have received if the pension-holders would have been entered into the Pension Protection Fund . Those with pensions of less than £18,000, around 9,000 of the 19,000, will be able to opt to take a lump sum and, if they choose to do so, Sir Philip Green may see up to £15 million returned to his pockets . The general sentiment of the business press today goes along the line of the following: ‘ Philip Green’s settlement… is a triumph for the regulator and for ...

It was reported over the weekend that the Work and Pensions Committee have suggested that the U.K. Government could prevent another spectacular financial collapse, like that seen recently with British Home Stores (BHS), if they were to make private companies abide by the Financial Reporting Council’s (FRC) corporate governance code – currently reserved for publicly limited companies. More specifically, the Committee’s report calls for Limited Companies - which have to abide by much less regulation traditionally - and who have more than 5,000 pension scheme members, should be governed by the Code which sets standards on board membership, remuneration, and shareholder relations. In this short post, the focus will be on the calls made by the Committee, and ultimately on what may need to happen for such a seismic, and frankly historical shift to take place. The report, which is focused upon corporate governance standards in the wake of the collapse of BHS and which inexplicably...