OFT won't back down over cap report
The chairman of the Office of Fair Trading has said that the body stands by the report it issued into an auditor liability cap, despite hostile reaction from the profession.
In a letter to trade and industry secretary Patricia Hewitt, John Vickers wrote: ‘I thought I should write to make clear that we stand by our conclusion.’
The OFT’s report has attracted fierce criticism after it claimed that the Big Four could get sufficient insurance to protect them from disaster, a position that the firms have constantly and vehemently denied.
But Vickers argued that insurance was not the biggest issue in stopping another firm falling.
‘We do not consider that a liability cap would prevent a collapse of one of the Big Four,’ he wrote. ‘Reputational rather than financial damage is likely to be the primary cause should a major audit scandal ever occur in future.’