Law firm brands the Big Six's liability cap anti-competitive

Head of banking Mark Vickers said that the letter, expected to be dispatched within a fortnight, will argue that a balance needs to be found ‘between the accountants’ legitimate interests and the funders’ legitimate interests’.

Vickers was reluctant to brand the Big Six a cartel, but said: ‘Given the market share of the Big Six, you can say that it is anti-competitive to that extent.’

He explained that accountants and equity providers often do not agree the terms of a due diligence engagement letter until days or even hours before completion. The accountants may carry out their investigation, but no report will appear until the liability matter is negotiated.

Vickers also expressed concern over the way in which the #25m cap is ‘divvied up’. Equity providers may suffer a loss as a result of a negligent accountant’s report soon after a deal is completed, but loan providers may not know if they will be repaid in full until the debt is due for repayment, years later.