At a relatively short hearing, Bischoff was repeatedly questioned on the concentration of the Big Four as auditors of the largest listed companies and the lack of competition in the market. ‘In ideal circumstances we would have more, say the Big Six, particularly when you are talking about auditor rotation,’ he said. However, when pressed he said that the problem was mainly at the FTSE 100 level and did not filter down to the FTSE 350.

Sir Win said: ‘The concentration is largely at the FTSE 100 rather than FTSE 300 end of the audit market. It is difficult to find those auditors at the next level – there are only four firms at the moment. One of the arguments is that only the big firms have the global scale.’

In reality, audit contracts are still concentrated in the hands of a minority of firms outside the FTSE 100. Only 4.4% of FTSE 250 firms are audited by non-Big Four auditors, Grant Thornton and BDO, as opposed to the Big Four.

But he added that some of the blame for the audit concentration rested with companies who were not prepared to use non-Big Four firms. ‘It is not only the audit firms – not that I want to defend the audit firms – but it is also the corporates who are looking to hire auditors.’

On the question of whether the Big Four – PwC, Deloitte, KPMG and EY – were too big to fail, he said: ‘I think they are too big to fail – I suspect if there were a major problem we would need to be more thoughtful than we were about Arthur Andersen’. He stressed that the firms were unlikely to fail because of their structure, which means that ‘only part of the firm would fail’.

The Committee members also questioned ‘the cosy relationship between the Big Four and the banks’, particularly the tendency for audit firms to provide extensive consulting and other services to their banking clients.

Sir Win batted this back by calling for more effective audit committees. He said: The audit committees need to make sure that they balance the audit and consulting services.'

Andrew Tyrie, chairman of the Treasury Committee, said: ‘You are certainly well qualified to do the job unlike some of the witnesses we have seen this year.’ However, Labour MP John Mann questioned Bischoff’s credibility as the head of the country’s accounting and audit regulator and overseer of corporate governance in light of his previous roles at Citigroup and later Lloyds Group. ‘One of the problems is that you are one of the insiders and yet you emerge as responsible for overseeing corporate governance in the sector,’ said Mann.

He said: ‘I was a senior member of the management team at Citigroup’, but stressed that he joined Lloyds Banking Group as chairman after the crash in 2009.