While the recent Financial Conduct Authority (FCA) Policy Statement – Removing the Transparency Directive’s requirement to publish interim management statements will certainly be welcomed by many of the organisations using London Registrars business consultant services, it will not necessarily have much impact on its aim of reducing the clutter of quarterly reports.

This is the view of Policy & Research Director at the Institute of Chartered Secretaries and Administrators (ICSA), Peter Swabey FCIS, who said that the change “won’t work in practice”, despite being “mostly” supported by respondents to the consultation, which the FCA carried out in July 2014. The Policy Statement also confirmed that the change would be implemented with effect from 7th November 2014, nearly a year ahead of the date when the Directive must be implemented by member states.

Commenting in an 18th November blog post on the ICSA website he had “had the joy of reading” the Policy Statement and Swabey added that the change was “Obviously… to be welcomed, and HM Treasury, the FCA and the EU are to be congratulated on a practical deregulatory measure which will actually cut some of the clutter from corporate reporting.”

However, he added that although there would be “many companies which are able to take advantage of the change, there is an important constituency which won’t.” He said that these were the companies with investors that had become accustomed to quarterly reporting and therefore expected them to continue.

Indeed, Swabey flagged up the findings of the most recent FT-ICSA Boardroom Bellwether report that 44 per cent of FTSE 350 companies expected to continue quarterly reporting, with only 16 per cent indicating that they would bring the practice to an end. When the companies that intended to continue quarterly reporting were asked for their reasons, responses ranged from shareholder/market expectations and an extraterritorial requirement to do so, to greater transparency and a need to fall into line with US competitors.

Although the European Commission introduced mandatory quarterly reporting for UK companies with the original 2007 implementation of the Transparency Directive, it was been the norm in the US market for many years. This, said Swabey, has placed UK companies with secondary US listing “under considerable pressure to continue to report on a quarterly basis, even though they are, in many if not most cases, exempt from that requirement.”

Swabey added that UK companies with investors who were “still wedded to short-termism” would be under similar pressure to continue quarterly reporting. Acknowledging that this was the sole driver behind the Government’s decision to proceed with early implementation of the change, Swabey suggested that “It would be helpful if the Government and FCA can discuss this issue with the US regulators and try to persuade them of the merits of abolishing this requirement themselves.

He concluded that this would “help companies more fully focus on the long term, and not be driven into short-term solutions.”