FRC Consultation on Temporary Amendment to Third Country Auditor Policy

FRC News

Published February 16th, 2026

Detected March 6th, 2026

Summary

The UK's Financial Reporting Council (FRC) is consulting on a temporary amendment to its Third Country Auditor (TCA) policy. The proposed change would allow auditors of Chinese-registered entities listing Global Depositary Receipts (GDRs) in London to use Chinese Standards on Auditing (CSAs) temporarily, aiming to boost capital flow and London's market competitiveness.

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What changed

The Financial Reporting Council (FRC) has launched a consultation on a temporary amendment to its Third Country Auditor (TCA) policy. This proposed change would permit auditors of Chinese-registered entities listing Global Depositary Receipts (GDRs) on the London Stock Exchange via the Shanghai/Shenzhen Stock Connect to use Chinese Standards on Auditing (CSAs) for UK listing purposes. This measure is intended to address a perceived barrier to listing and support UK economic growth and global market competitiveness, while maintaining investor protection through safeguards such as ongoing supervision and clear disclosures.

Regulated entities, specifically auditors of Chinese-registered entities seeking to list GDRs in London through Stock Connect, should review the proposed amendment and provide feedback. The FRC is seeking views on whether the proposed approach adequately balances investor protection with economic objectives. While specific compliance deadlines for the amendment itself are not yet set, the consultation period is the immediate action point for interested parties. The FRC emphasizes that this is a time-limited measure pending a longer-term legislative solution, and it applies only to entities listed in the Stock Connect segment of the LSE International Order Book.

What to do next

Review the FRC's consultation document on the temporary amendment to the TCA policy.
Submit feedback on the proposed use of Chinese Standards on Auditing (CSAs) for eligible Chinese-registered entities listing GDRs in London.
Assess potential impacts on audit practices and client listings if the amendment is implemented.

Source document (simplified)

FRC consults on temporary amendment to TCA directions

News types: Consultation Announcement

Published: 16 February 2026

The Financial Reporting Council (FRC) is consulting on a temporary amendment to its Third Country Auditor (TCA) policy. The proposed change would temporarily permit auditors of Chinese-registered entities listing Global Depositary Receipts (GDRs) in London to use Chinese Standards on Auditing (CSAs) for UK listing purposes, supporting the flow of capital, enabling investment and growth.

This consultation follows a request from the UK Government which is seeking to address a perceived barrier discouraging some Chinese-registered issuers from choosing the UK as a listing venue. Allowing the use of CSAs on a temporary basis aims to encourage eligible Chinese registered entities to list on the London Stock Exchange through the Shanghai/Shenzhen Stock Connect agreement between the Financial Conduct Authority and the China Securities Regulatory Commission.

The proposed amendment is intended to support a shared wider Government objective of boosting UK economic growth and strengthening London’s global market competitiveness, while ensuring that appropriate safeguards remain in place.

The proposed change is narrowly scoped, time‑limited and includes safeguards designed to uphold investor protection and market integrity, pending a longer-term legislative solution:

Time‑limited and clearly scoped
Accompanied by safeguards, including transparency requirements, continued TCA registration and ongoing supervision
Clear disclosures stating the applicable auditing standards that have been used.
Auditors of entities listed on Stock Connect would be required to register with the FRC as TCAs; remain subject to ongoing supervision .
It applies only to entities listed in the clearly identifiable Stock Connect segment of the LSE International Order Book and does not affect other China-registered issuers nor alter the wider TCA regime. The FRC is seeking views on whether this approach appropriately balances the UK’s commitment to investor protection and audit quality with the strategic objective of supporting economic growth and strengthening London’s global market competitiveness.