The UK's accounting regulator is to lose its government funding and is to rely on companies and accounting firms for its finances.

The Department for Business, Enterprise and Regulatory Reform today announced it would like to see new funding arrangements in place for the independent Financial Reporting Council.

The FRC is now set to move to private sector funding, in line with funding arrangements of other regulators including the pensions regulator and the Financial Services Authority.

Secretary of state for trade and consumer affairs, Gareth Thomas, said government concluded that the FRC should be funded largely by market participants since it is a market-led regulator.

'Corporate reporting and governance in the UK are widely recognised
domestically and internationally as being of a very high standard generally.

'The FRC's integrated and market-led approach to regulation underpins these standards. This approach continues to receive strong support from companies, investors, the accountancy profession and other stakeholders,' he said.

The regulator is expected to consult market participants on the options for new funding arrangements.

Government will continue supporting the organisation until the 2008/9 financial year so as to allow an orderly transition to stable, new, long-term funding arrangements