The Commons Treasury Committee will cross-examine audit industry representatives this month as part of an investigation into the banking crisis.

The 28 January hearing will question auditors about their role in the crisis and whether reform of the auditing industry is needed.

MPs on the influential committee will also question CBI boss Richard Lambert as well as representatives of hedge funds, other investors and the credit reference agencies.

Lib Dem MP Lord Thurso said: ‘Auditors obviously play a crucial role in the corporate governance of financial institutions. The clear lesson of the last 18 months is that the ability to create new financial instruments outpaced our ability to understand and regulate them.

‘Auditors are best placed to help us understand the problems and potential solutions.’