Insurers Lloyds of London plan to put their external audit contract - currently held by Ernst & Young - out to tender, amid sweeping regulatory moves which aim to break up the stranglehold of the Big Four on the audit market.

The company's intentions were first announced in its annual report published last month, in which audit committee chair Claire Ighodaro said that the most recent evaluation of the external auditor resulted in the committee being satisfied with the performance of the external audit.

'However, as a matter of good governance the audit committee considers that external audit should be subject to a competitive tender during 2013,' Ighodaro said.

Lloyds' external audit was last subject to a competitive tender in 2001. At the time, E&Y was re-appointed.

The insurer notes its fees paid to E&Y in its 2012 annual accounts as £1.6m (2011: £1.4m) comprising £663k (2011: £628k) for audit work; £504k (2011: 449k) for other services relating to work on the aggregate accounts, pro forma financial statements and regulatory returns; £45k (2011: 50k) for actuarial work; £98k (2011: £65k) for tax services; and £389k (2011: 268k) for other services, which were not detailed.

The company has policies in place to govern non-audit services in relation to auditor independence - which stipulates that the external auditor may be permitted to undertake non-audit services, on a pre-approved basis, for amounts up to £100,000. Non-audit work that exceeds this threshold can only be undertaken upon approval from the audit committee chairman, who must consider that the work is justified, and if appropriate, tendered.

E&Y also provides specific assurance to the audit committee on its independence and objectivity.

E&Y declined to comment on whether it would bid for the audit contract.