Tyrie challenged to start CMA review of Big Four
23 May 2018
Prospects for a major review of the options for breaking up the Big Four accountancy firms have got closer as MPs have challenged Andrew Tyrie, the former chair of the Treasury committee and incoming head of the Competition and Markets Authority (CMA) to start work on this ‘as soon as possible’
23 May 2018
The demand comes in one of a series of letters released by the work and pensions and BEIS joint committee which is investigating the collapse of Carillion which have been sent to all the witnesses and key stakeholders inviting their responses to the inquiry’s findings.
The letter to Tyrie calls on him to ‘demonstrate what a new broom you are at the CMA by asking your staff to initiate’ a review of the options for breaking up the Big Four.
The Carillion final report recommended that the CMA be asked to review the statutory audit market, including consideration of both breaking up the Big Four into more audit firms, and detaching audit arms from those providing other professional services.
The letter to Tyrie points out that in his evidence to the committee on in April, he said this was ‘certainly something that needs to be looked at’ and asks him to do so ‘as soon as possible’.
The joint committee has also written to Sir John Kingman, chair of the independent review of the Financial Reporting Council (FRC), asking him to take on board its criticisms of the regulator when he makes his assessment of its culture and leadership.
The letter states: ‘The report highlighted multiple serious concerns about the performance of the FRC. We stressed that, though additional powers would be useful, the FRC needed a “significant shift in culture” to perform as it should.
‘We are therefore pleased that your review will encompass the culture of the FRC. Culture in an organisation is largely defined at the top. Can you therefore confirm that your review will consider whether the leadership of the FRC is equipped to effect the necessary change?’
In addition the joint committee has tackled The Pensions Regulator (TPR) over what it calls ‘very modest’ targets for the regulation of defined benefit schemes. Its letter says this is this is characteristic of ‘an organisation where a tentative and apologetic approach is ingrained’.
It says the regulator needs to be ‘tougher, clearer, quicker’, and notes the committee is ‘far from convinced that TPR’s current leadership is equipped to effect that change’.
The letter asks the TPR to set out how the board intends to evaluate the performance of current chief executive Lesley Titcomb before March 2019, which is when her current contract expires, and what the criteria will be for appointing or reappointing the next chief executive.
Committee letter to Andrew Tyrie is here.
Committee letter to Sir John Kingman is here.
Report by Pat Sweet