Auditing and insolvency regulation is a mess. Five Recognised Supervisory Bodies regulate around 9,500 auditing firms. Seven Recognised Professional Bodies regulate around 1,800 insolvency practitioners. This is then further complicated by organisations such as the Auditing Practices Board, the Joint Disciplinary Scheme, the Joint Monitoring Unit, the Joint Insolvency Monitoring Unit and many overlapping committees.
All are experts at defending ‘private’ interests, passing the buck, obfuscating the issue, taking years to investigate complaints against major firms, and doing nothing for the long-suffering public.
These regulatory organisations are trade associations ‘captured’ by the auditing and insolvency industries representing and protecting ‘producers’ of those services. None owes a ‘duty of care’ to any stakeholder. None represents the wider public interest or defends the consumer who is reduced to angry impotence, particularly over fees and scams.
Elsewhere, the Treasury is streamlining the overlapping structures and removing the self-serving trade associations to create an independent Financial Services Agency.
At the trade department, Peter Mandelson has decided that the structures which have failed in the past, which have produced no report on audit failures at Maxwell, Polly Peck, Levitt, Wallace Smith, Resort Hotels and BCCI, can remain in place. Accountancy institutes which sweep scandals under their carpets can continue to enjoy their regulatory powers.
The DTI should act in the wider public interest. Instead, the ministers are wringing their hands. Accountants don’t win because the proposed structure will not secure public confidence. The trade associations will not be able to rise above their in-built conflict of interests.
But the ministers will have an insurance policy. In the event of scandals, they will claim sorting out the mess is someone else’s problem. For this, accountants will need to cough up between #500,000 and #2m to finance the proposed regulatory structures. A regime independent of the trade associations firmly based on statute is inevitable.
What a waste of time that yet another new minister has to be educated in that.
Austin Mitchell is Labour MP for Great Grimsby
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