Companies (Directors’ Report) (Payment Reporting) Regulations 2025

Baroness Fookes Excerpts

Wednesday 15th October 2025 Grand Committee

[Lord Leong (Lab)]

My Lords, I am really conscious of what is happening in the Chamber, so I will try to be as comprehensive as possible and brief at the same time. I am really grateful to noble Lords across the Committee for their contribution. It is evident that we all agree that tackling late payments is crucial for driving the economy forward and I thank all those who have spoken in this debate. I will try and answer as many of the questions as possible, especially those from my noble friend Lord Sikka. If I have not answered all his questions, I will go through Hansard and write to him.

My noble friend Lord Sikka asked why there are so many places where businesses have to report on their payment method. This gives businesses two places where they can look for the same information. It should not increase costs, and it basically gives flexibility and the choice for businesses as to where they look for this information. I would say it is good that there is not only one place but various places that they can look for such information.

The noble Lord asked who enforces company law. I am sure that he will know that Companies House is also an enforcement agency, and we have invested a fair bit to ensure that it is able to enforce company law accordingly.

The point about directors’ reports not being audited is not correct. Auditors do audit directors’ reports under the Companies Act 2006. They must say whether information in the directors’ report is consistent with the annual accounts and must highlight any material misstatements or inconsistency.

The noble Lord also pressed on the Reporting on Payment Practices and Performance Regulations 2017, which also applies to LLPs. This requires large business in the UK to publish information biannually about their payment practices and performance to the GOV.UK portal. Initially introduced in 2017, these regulations were amended in 2024 and 2025 following a 2023 consultation. The current regulations do not apply to LLPs because LLPs do not publish a directors’ report.

The noble Lord, Lord Sharpe, asked about enforcement. The Financial Reporting Council has a responsibility to review the annual reports and accounts of large companies for compliance with accounting standards under the Companies Act 2006. Where potential non-compliance is identified or suspected, the FRC can write to the company for further clarification and will aim for voluntary amendment of the disclosure in subsequent periods. Where this is not possible, Section 456 of the Companies Act 2006 gives the FRC the power to apply to the court for a declaration that the directors’ report does not comply with the Act. In such circumstances, the court can order that the preparation and distribution of revised accounts be carried out at the directors’ personal expense.

The data produced by this report is analysed by the Department for Business and Trade and used to evaluate whether payment practices are improving. We can use this information to determine how beneficial the relations have been and where we can do more to help improve payment times. This regulation will be subject to statutory review on or before 6 April 2029.

Further, the Reporting on Payment Practices and Performance Regulations 2017 requires that large companies report their payment performance twice a year.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, a Division has been called. The Committee will suspend for 10 minutes.