Earlier this year Stephen Haddrill, FRC CEO, told the BEIS and work and pensions select committee investigating the collapse of Carillion that he had written to the CMA to urge another investigation into competition in the audit market.

Now Haddrill has repeated his view that more needs to be done to stimulate competition for audit work amongst the UK’s largest companies, in an interview with the Financial Times which revealed he has held three discussions with the CMA about opening an investigation into the UK audit market, and further talks are scheduled.

Haddrill said: ‘There is a loss of confidence in audit and I think that the industry needs to address that urgently. In some circles, there is a crisis of confidence.’

The FRC says the Big Four audit 97% of FTSE 350 companies currently, while at the time of the Competition Commission investigation in 2012/13 it was 95%, and argues that competition has reduced rather than increased.

The regulator says it is hard for non-Big Four firms to win larger company audits, not least because of the cost of putting in bids for audits they are most likely not to win. However with retendering (at 10 years) and forced rotation (at 20 years) it could mean competition for a replacement auditor involves only three of the remaining Big Four firms and in some cases fewer than this where one firm has less expertise in a particular sector.

Haddrill said: ‘The Competition Commission introduced some remedies to try and encourage more competition. But there is no more competition. So it seems to me that we ought to have another look at [the audit market].’

The CMA said: ‘We are actively monitoring the remedies put in place following the Competition Commission’s inquiry. This monitoring is ongoing and the [authority] remains open to looking further at this sector in the future.’

Report by Pat Sweet