CONSULTATION IN THE POLICY PROCESS: DOUGLASIAN CULTURAL THEORY AND THE DEVELOPMENT OF ACCOUNTING REGULATION IN THE FACE OF CRISIS
| Date | 01 December 2016 |
| DOI | http://doi.org/10.1111/padm.12212 |
| Author | PHILIP LINSLEY,ROBERT MCMURRAY,PHILIP SHRIVES |
| Published date | 01 December 2016 |
doi : 10. 1111/p adm .12212
CONSULTATION IN THE POLICY PROCESS:
DOUGLASIAN CULTURAL THEORY AND THE
DEVELOPMENT OF ACCOUNTING REGULATION
IN THE FACE OF CRISIS
PHILIP LINSLEY, ROBERT MCMURRAY AND PHILIP SHRIVES
This article employs Douglasian cultural theory to explain how policy consultations intended
to secure meaningful reform can, in fact, work to reinforce the status quo. The context for this
is an examination of responses to three consultations established by the Financial Reporting
Council (FRC), the body responsible for regulating accounting and auditing in the UK. The results
reveal a lack of diversity of voices in the responses to three consultations, with the enclave and
isolate voices being signicantly under-represented despite the policy issues under debate being
related to the nancial crisis. Further, the initial pre-consultation proposals are largely unchanged
post-consultation. We suggest that the regulator has not been captured; but instead is subject to
what may be described as self-capture. Self-capture describes the instinctive reaction of a solidarity
to act to uphold its pattern of social relations which results in the regulator’s worldview inevitably
(and unwittingly) being perpetuated.
INTRODUCTION
As the British regulatory state has grown over the last three decades, so too has con-
cern that the promise of independent oversight is giving way to politicization and vested
interest (Lodge 2014). Moreover, consultations intended to secure meaningful reform in
regulatory functions across policy areas as diverse as welfare provision, infrastructure
development, and nancial services (James 2000; Oliver 2010; Lodge 2014) have failed to
bring about dramatic changes in oversight policy or practice. Employing Douglasian cul-
tural theory (DCT), we consider how the very consultation processes designed to facilitate
change have in fact worked to reinforce existing modes of thought and practice so as to
buttress the status quo.
The context for this exploration is the greatest regulatory failure of recent times; the
2007–08 nancial crisis which resulted in the UK government taking emergency measures
to ensure that the banking system did not fail and, ultimately, acquiring shareholdings in
major UK banks such as Lloyds Banking Group. The crisis shone a light on weaknesses in
regulation (FRC PN 243 2008), and a fundamental review of the regulation of the nancial
services sector ensued. However, the body charged with securing change in respect of
the regulation of accounting, auditing and governance – the Financial Reporting Council
(FRC) – concluded in the aftermath of the crisis that ‘(we) currently believe that the recent
difculties in the nancial sector do not require a generalised tightening of governance
standards across the UK corporate sector’ (FRC PN 243 2008).
The FRC fulls its primary role of regulating accounting and auditing in the UK through
two committees. The Conduct Committee is focused on disciplinary and supervisory mat-
ters in respect of the accounting and auditing professions, while the remit of the Codes and
Standards Committee is to set accounting, auditing and governance codes and standards.
Philip Linsley is at the YorkManagement School, University of York, UK. Robert McMurray is at the Durham Business
School, University of Durham, UK. Philip Shrives is at the Newcastle Business School, Northumbria University,UK.
Public Administration Vol.94, No. 4, 2016 (988–1004)
© 2015 John Wiley & Sons Ltd.
CONSULTATION IN THE POLICY PROCESS 989
The FRC undertakes a public consultation process when a code or standard needs amend-
ing or originating and all consultation responses are made available on the FRC website.
Following consultation, proposals are rened and the nal version of a standard or code
published.
This article explains how the FRC consultation processes worked against the very possi-
bility of substantial policy reform and regulatory change. With the aid of DCT we explore
how different solidarities function as ‘a consistent pattern of constraints upon reasoning
towards decision-making’ (6 2014a, p. 90) so as to circumscribe the room for change such
that, ultimately, people are led to make decisions that reinforce the dominant institutions
of which they are part. Such reinforcement has the secondary effect of making it difcult
for people to attend to the arguments of other solidarities. Specically, we demonstrate
how a dominant individualistic worldview was maintained (at the expense of more hier-
archist, enclave or isolate worldviews) such that the consultation processes emerge as a
mechanism for the maintenance of prevailing policies rather than the starting point for
their substantive re-negotiation.
The article is structured as follows. The rst section justies the selection of three key
post-crisis consultative activities of the FRC. The second discusses important aspects of
DCT and the third explains the method employed in analysing the three consultations.
The results are then reported in terms of the competing cultural dialogues identiable
in the differing policy proposals submitted by the consultation contributors in respect
of individualist, hierarchist and enclave solidarities. We argue that the responses of the
individualistic solidarity identied within the FRC, albeit moderated by a subordinate
hierarchical worldview, took precedence over the views of the other solidarities. In con-
cluding, we note that while DCT cannot prevent regulatory or policy failure, in attending
to the underlying logics of shifting worldviews it can provide useful pointers to policy
blind spots arising out of particular cultural biases.
FRC CONSULTATION SELECTION
The government department responsible for economic growth in the UK is the Depart-
ment for Business, Innovation and Skills (BIS). ‘Corporate accountability’ is a key BIS
policy established to address a perceived loss of public condence in how companies are
run. The FRC chairman is appointed by the Secretary of State for BIS and in 2013–14 the
FRC had an operating budget of c. £26 m (FRC Annual Report 2013–14). Therefore, the
FRC was selected for this study as it is a signicant regulator in an important government
department and is concerned with matters with a high public prole post-the nancial
crisis.
A proportion of FRC consultations concern technical amendments to accounting stan-
dards or audit practice notes. Consequently, in selecting the consultations to examine for
this study it was considered that less-specialized consultations were likely to be more char-
acteristic of public consultation processes, being of broader public concern. Three different
consultations were selected from each of the years 2009, 2010, and 2011. The cases are all
post-nancial crisis when calls were being made for regulatory reform in the accounting,
auditing and governance eld.
The rst case, the Cutting Clutter (CC) project, concerned the FRC’s complexity of corpo-
rate reporting project. In June 2009 the FRC issued a discussion paper,‘Louder than Words’
(FRC discussion paper 2009) suggesting that it was time to reconsider the fundamen-
tal purpose of accounting. The project had a primary concern with reducing complexity
Public Administration Vol.94, No. 4, 2016 (988–1004)
© 2015 John Wiley& Sons Ltd.
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