Self regulation has clearly had its day in most sectors of the finance industry. Financial services, banking, insurance and even food are all being given independent statutory based regulators. The spirit of the age demands that all major sectors of activity should be regulated by independent bodies to make them accountable and introduce the public interest into their considerations.
The same principles should apply to auditing and insolvency. Yet here the trade associations – or to give them their more dignified name, the professional bodies – are desperate to hang on to their existing regulatory powers.
If regulation is to be genuinely independent, its processes must be independent of the established vested interests.
In audit and insolvency, though, the accountancy firms and their trade associations are dominant. They won’t let go and their rearguard action is the Swinson plan. This ignores the central issues of independent accountability.
Instead of reducing the present eight regulators in insolvency and five in auditing, it adds another layer in the from of a ‘review board’. This body will be made up of the chaps who have for so long failed to regulate chaps.
All will be on the payroll of the accountancy trade associations, though the English ICA has given assurances that CIMA and ACCA will not bear the full cost of the Swinson regime to get them to fall in behind the plan. That means the ICA members must either have deep pockets or a desperate need to maintain unity.
The accountancy bodies should take stock of their position. The old-fashioned, dark-suited ‘profession’ has ceased to exist. This is big business with oligopolies in the shape of the Big Six (or Big Four) dominating the market.
Auditing is not even their major business.
Having built big businesses on the back of the audit monopoly they should realise that without public confidence audits become irrelevant.
Rather than hanging on to the past, the accountancy bodies must find a new role for the 21st century. That is the least they can provide in an audit given to them by statute. Either fulfil it properly or give it up.
The only way to do it better is have it properly regulated.
Austin Mitchell is Labour MP for Great Grimsby.
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