Pre-appointment hearing with the Government’s preferred candidate for Chair of the Financial Reporting Council Contents

Appendix 2: Questionnaire

Questionnaire for the Government’s preferred candidate for the Chair of the Financial Reporting Council: Simon Dingemans.

What motivated you to apply for this role, and what specific experiences would you bring to it?

The state of financial reporting in the UK has received significant attention in recent years provoking a valid debate over whether it is fit for purpose. While recent high-profile corporate failures have heightened that debate, the concerns raised around audit quality, effective supervision and ultimately the accountability of those preparing financial statements have been around for a lot longer and particularly since the financial crisis over a decade ago.

The failure to address those concerns has contributed significantly to the broader loss of confidence in business and I agreed with the argument that something more radical would be required to reverse that trend. As a result, when the Kingman report proposed the creation of the ARGA as a new body to replace the FRC and to drive a series of very fundamental reforms, I was interested to see how those recommendations would be received. With their endorsement by the Secretary of State and broad acceptance of the need for a very different approach, I felt that there was a real opportunity to deliver the necessary step change in the financial reporting framework in the UK alongside a strengthening of the FRC’s other responsibilities for Stewardship, Governance and nonfinancial reporting.

This new mandate for change is what motivated me to apply for the role of Chair of the FRC. The opportunity to lead the evolution of the FRC and its replacement by the ARGA is a significant one. Together with the successful delivery of the recommendations of the Kingman Report and other proposed changes, including from this Committee, the role of Chair offers the opportunity to contribute meaningfully to restoring confidence and trust in business and the benefits that it can bring, including increased investment and stronger economic growth.

The next few years will be a period of significant change for the FRC requiring a very fundamental transformation, including the settling up of the new body, the ARGA. I believe I can contribute and help lead this journey as Chair given my very direct experience of major transformations in my previous roles. Over the last 8 years, I have served as a member of the Board and Chief Financial Officer of GlaxoSmithKline plc, a large and complex organisation employing around 100,000 people. In that time GSK has been though its own multi-year period of transformation. During this time, I was directly accountable for setting strategic goals and objectives, monitoring and tracking them for successful delivery and holding the implementation teams to account. This very real hands-on experience and my resulting track record of successful delivery will, I believe, help me to support and guide the executive during this period of significant change.

Delivery of this level of change is also about engaging the organisation at all levels and persuading employees of the reasons for the changes and how each can play their part in delivering them. At GSK, we spent considerable time on this engagement process and the successful execution of the re-shaping of the company in recent years has been heavily reliant on the transparency we have insisted on for all employee communications. These skills will be very relevant to aligning the wider FRC organisation to the cultural changes that will be required.

However, engagement will not only be needed internally. The many stakeholders for the FRC mean extensive external communication and in this area, I bring significant experience given my role at GSK but also my background formerly as an advisor to many large FTSE companies. In both roles I have needed to influence, communicate and engage with investors, media and regulators. The role of Chair will require similar engagement and I would be comfortable representing the Board and the FRC more broadly in these types of situations.

If appointed, are there specific areas within your new responsibilities where you will need to acquire new skills or knowledge?

The role of Chair of the FRC would build on my experiences to date which I believe cover the key principal responsibilities identified. As a result, I do not believe there are specific areas that would need new skills directly. However, inevitably, my experience has varying degrees of relevance and so some adaptation and translation will be required to deliver the role successfully. I have a clear track record of such adaptation, for example in the translation of my experiences before GSK to my role as CFO. This also required working closely with my own team and others in the company to draw in specific areas of expertise or hire additional capabilities, as required.

I would expect to do the same with the team at the FRC as it evolved, including the proposed new executive leadership. To deliver the transformation proposed, new skills and capabilities will be required in the team, including at Board level and also some step-up in the seniority of those leading the change. In the short term this is likely to be particularly required in areas such as the team delivering AQRs. This is because I see this as an area where I believe we can make a significant impact relatively quickly while other elements of the transformation to the ARGA, including the new statutory framework, are being prepared and implemented.

How were you recruited? Were you encouraged to apply, and if so, by whom?

I was approached through the appointed Headhunter, Odgers.

Do you currently or potentially have any business, financial or other non-pecuniary interests or commitments, that might give rise to the perception of a conflict of interest if you are appointed? How do you intend to resolve any potential conflicts of interests if you are appointed?

I have no other appointments or interests at present that I believe should give rise to any conflict of interest with the role as Chair of the ARGA. Any investments I hold in PIEs are managed on an arms length discretionary basis except for my shareholdings in GSK as some of those holdings are subject to retention and other restrictions. If an issue arose concerning GSK during my term, I would recuse myself from any relevant decisions.

If appointed, what professional or voluntary work commitments will you continue to undertake, or do you intend to take on, alongside your new role? How will you reconcile these with your new role?

I am considering a number of other roles in the private sector, including potential board or investing roles. However, I do not have any at the moment and I will only consider them if they allow me the time and flexibility necessary to fulfil my role as FRC Chair. I am determined that any such additional roles do not create a real or perceived conflict with being FRC Chair.

Have you ever held any post or undertaken any activity that might cast doubt on your political impartiality? If so, how will you demonstrate your political impartiality in the role if appointed?


Do you intend to serve your full term of office?


How will you manage the transition to ARGA? How different will the new independent regulator look and feel under your Chairmanship?

The transition to the ARGA will be a very significant one from the current ways of working at the FRC and we need to be realistic that completing that journey will take some time before the changed is embedded and sustained. However, with clear goals, I believe that the new independent regulator can make early progress by setting a very different expectation amongst those it regulates and supervises including, in particular, the preparers of accounts and those who audit them.

To do this I would want to set a much more proactive agenda in the early days to call out the quality improvements that are needed and establish much clearer benchmarks. This will require greater levels of review and more transparency around the results of those AQRs, in a very similar way to the US approach to such reviews. It will also require a cultural change to be more proactive in anticipating issues where flags are showing but also to investigate those that do arise, thoroughly but with much greater pace so that lessons can be learned for all more quickly.

Much of this can be done while the other more structural changes being contemplated are enacted but should not be seen as a substitute for the new statutory framework recommended by Kingman. Without this clearly being expected to be in place, it will be all too easy for those who would avoid the changes to delay and dilute the momentum now in place for real and lasting change.

Establishing this different approach will also require a refresh of the Board and the team leading the new regulator. Some of the critical early steps are already underway but more will be required starting at the board level. This needs to be done in a way that does not lose knowledge continuity (where relevant) or create distraction but will be a vital part of changing the culture. Both Board and executive leadership need to own that change and role model it consistently.

What qualities and experience would you look for in the CEO of ARGA?

The transition of the FRC to the ARGA and its new responsibilities will require a CEO with very strong leadership skills including, in particular, the ability to communicate internally and externally with energy around the changes being targeted. To drive the cultural change I have described, the CEO will need to exemplify that same proactive profile and approach and be able to engage the current staff of the FRC and recruit and attract the new capabilities that will be required.

The successful candidate should also have a track record of driving change in large organisations and be able to articulate clear goals and how they should be tracked and monitored for delivery. That record would demonstrate an ability to work with multiple stakeholders and deliver broad support for the change and well as execution of the agree objectives. This will be important to the wider objective of re-building trust in business and ensuring, in particular, that there is clear alignment as to the purpose of an audit and that the current “expectation gap” is addressed.

What sort of cultural change is required under the FRC and ARGA? How would you lead this?

To deliver the changes being targeted will require a significant cultural change. One that establishes the ARGA as more proactive, challenging and willing to confront vested interests. In short it needs to be prepared to show more teeth and convince those it regulates that it will use them if necessary. This will also allow it greater credibility to provide much needed leadership on other reforms such as the debate on a UK “Sarbanes-Oxley” type framework.

To do this will require appropriate resourcing to be able to move quickly and throughly, but also a very different mix of skills and capabilities to that in place today. It likely will also need different levels of seniority among those leading the reviews and investigations to reinforce the credibility of the new organisation and demonstrate that it will be acting differently.

In addition, I would be very focussed on making sure that the new body has sufficient range of skills and backgrounds to dilute any real or perceived closeness or conflict with those it regulates, particularly the Audit profession.

What measures would you put in place to stop the FRC and ARGA being captured by those they regulate?

Clearly the FRC and it successor, the ARGA, needs to have the requisite technical skills within the organisation or available independently to complete the reviews it needs to do. However, other inputs and views are also important including those of investors and other users of accounts. As a result, I believe that it will be important in delivering the changes proposed that the ARGA builds a team with a much broader range of skills and backgrounds than the FRC has today. This will be particularly important if the ARGA is really to adopt a more proactive approach to early warning signals.

This greater breadth and new talent will bring different perspectives and allow for a more challenging approach. However, I would also be very focussed on making sure that it established a balance that prevented the ARGA from becoming too close to any one group, particularly the Audit profession. This shift in backgrounds needs to start with the Board and Executive team but also to be driven through the organisation over time.

The proposed new funding arrangements for the ARGA are critical to provide the resources necessary to build the capabilities and greater capacity required. Importantly, however, they will also allow for a re-shaping of the team to bring more seniority to key roles, for example those leading the AQRs, and through those new hires shift significantly the credibility of the ARGA.

How would you overcome organisational resistance to change?

As highlighted in Q1, delivering this sort of change will require engaging the broader organisation effectively. Not only is the ability to do this a key requirement for the new CEO, but it will also be for the wider executive team.

Engaging at all levels will help employees at all levels to understand the changes being proposed and decide if the new direction is for them or not. Inevitably there will need to be a change in capability and some turnover should be expected. New hires will also be required, not least because the ask of the ARGA is significantly broader, but existing staff should be offered support and training to engage in the new ways of working. My experience of similar change journeys is that they can lead to the release of significant energy if the objectives are clear and those who would block progress are identified early on in the process of change.

Published: 22 July 2019