We need a regulator with teeth to control the ‘Big Four’ accountancy firms

When he was in his pomp in the House of Commons, Vince Cable used to rail against some aspects of the City. One that especially got his goat was the domination of the “Big Four” accountants. It could not be right, said Cable, that a handful of firms hogged Britain’s top drawer of financial business.

Cable, correctly, would get on his high horse. The big accountants were operating a closed shop – hugely lucrative to those fortunate enough to be inside, but frustrating for those excluded – and causing scandals in which the losers were shareholders, pensioners, employees and suppliers.

The four – KPMG (Klynveld Peat Marwick Goerdeler), EY (Ernst & Young), PwC (PricewaterhouseCoopers) and Deloitte – were responsible for conducting the audits of most of the country’s largest companies. One bone of contention was the way in which the firms would undertake more lucrative consulting for companies they were auditing. In theory, they were meant to be apart, but it was hard to see how a client could receive a critical audit full of qualifications from the auditor if that auditor was also earning a higher sum elsewhere from advising the same company.