Audit cap ruled out

In a written statement to the house, secretary of state for trade, Patricia Hewitt, said: 'I have considered carefully whether there is a case for a change in the law on auditor liability.'

'In the light of the consultation responses, and the OFT's advice that introducing a cap would not significantly enhance competition, I have concluded against proposing changes to the law on this.'

Peter Wyman, senior partner at PricewaterhouseCoopers, said it was what the profession was expecting but it is 'looking very favourable at early reform to permit proportionality by contract if we can demonstrate that there is support in the investor and business community'.