The Financial Reporting Council (FRC) has scrapped most of the original 18 proposals that were set out in its consultation on the UK Corporate Governance Code.

The consultation, which closed in September, marked the first time in five years that revisions were being considered for the code. Following some negative feedback however, the FRC has decided to not proceed with many of its suggestions.

In an update released this week, the FRC CEO, Richard Moriarty, explained that the body had recognised some of the concerns raised by respondents to the consultation that warned of "unintended effects on businesses, investors and their advisers".

As a result, Moriarty confirmed that there will be a small number of changes that aim to streamline and reduce duplication associated with the code. The main alteration to the code will centre around revisions on internal controls.

"The decision has been informed by very helpful stakeholder feedback to ensure we end up with a more targeted and proportionate code revision," Moriarty explained.

"This includes allowing more time for its implementation and ensuring the UK approach clearly differentiates from the much more intrusive approach adopted in the US."

The FRC will not take forward proposed changes to the role of audit committees on environmental and social governance, modifications to existing code provisions around diversity, and over-boarding.

A number of other proposals will also not be taken forward as a result of the government’s recent decision to withdraw its statutory instrument relating to an audit and assurance policy, reporting on distributable profits and resilience statement requirements.

"We are very keen to explore ways of ensuring any guidance is proportionate and limits burdens whilst not weakening effective governance," Moriarty said in his update.

"This is critical to our role in supporting growth and the UK’s competitiveness.

"To help tackle this, from January 2024, the FRC intends to give an additional remit to its Stakeholder Insight Group to provide the FRC with advice on whether there are aspects of its current and planned guidance associated with the code that could be improved to ensure the right balance is struck between supporting effective governance and reducing unnecessary burdens.

"This group’s membership consists of a mixture of investors, preparers, advisors and related membership bodies. It will report on this additional remit directly to the FRC CEO."

The FRC has also noted that during the consultation concerns were raised over aspects of the UK Stewardship Code. The FRC is due to review the code in 2024 and says this is its next priority once the updated UK Governance Code is issued in January.

"We remain resolutely focused on ensuring our current regulatory tool-kit is used to best effect for this purpose, working closely with our stakeholders," added Moriarty.

"This includes setting proportionate standards, fostering a culture of continuous improvement and holding to account those that fall short. In doing so, we want our work to support the government’s broader ambition of making the UK the best place in the world to start, grow and invest in a business."

In related news, the FRC has also launched a new consultation on proposed changes to the Actuarial Standard Technical Memorandum 1 (AS TM1) to reflect the changes in the market conditions and outlook.

AS TM1 sets out the required approach for producing the annual statutory money purchase illustrations (SMPIs) received by those in DC pension schemes.

The consultation includes plans to increase accumulation rate assumptions in the calculation of the pension illustrations given changes in market conditions.

No other changes were proposed to other assumptions or methodology set out in AS TM1, however, as FRC's recent review found that while market conditions and outlook have changed since the previous review was conducted, "considerable uncertainty remains".

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