A group representing institutional and individual investors has criticised the Competition Commission's proposed remedies for the statutory audit market, saying they fail to tackle 'pervasive structural flaws' .

The response, from the UK Shareholders Association and fund managers and heads of corporate governance with around £600bn of assets under management, says the proposals do not go far enough to increase direct accountability to shareholders, and rely excessively on regulatory oversight.

The group says plans to increase the frequency and depth of the Audit Quality Review Team (AQRT) investigations would not necessarily provide information of use to shareholders and could end up giving more authority to the Financial Reporting Council (FRC). It is also concerned that the increase in resources required by the FRC would result in 'regulatory capture', drawing away auditors from industry.

The group is also critical of the CC's competitive tendering proposals, saying that because they do not put a cap on an auditor's tenure, they will naturally favour the incumbent. It says the cap should be set at 15 years, and it also wants to see a limit on the amount of non-audit work that may be undertaken by the auditor.