PracticeConsultingOFT criticises ‘restrictive’ professions

OFT criticises 'restrictive' professions

A long-awaited report from the Office of Fair Trading has found the 50% rule is a significant restriction to entry into the accountancy profession.

The rule – which says 50% of a firm’s partners have to be audit qualifified for the firm to take on statutory audits – is said by the OFT to be a restriction on competition.

The implication is that consolidators and multidisciplinary practices driven by non-qualified managers are at a disadvantage when attempting to compete in the market for audit work.

A report produced by consultants The Legal and Economic Consultancy for the OFT, said: ‘The rule may inhibit, for example, large non-accountancy firms from entering the market through the acquisition of small high street firms.

‘Moreoever, the 50% rule will inhibit the development of MDPs.’

The report goes on to say that rules that disallow accountancy firms from cold calling for business and regulations restricting the referral of business are alsp inhibiting competition and the development of online accountancy marketplaces.

The ICAEW welcomed the report and called it a detailed and considered appraisal of the competition issues relating to the accountancy profession.

Peter Owen, executive director of Professional Standards at the ICAEW, said: ‘Maintaining high professional standards is integral to serving the public interest. Moves are already underway to review existing guidance on advertising restrictions to bring regulation of the profession in line with accepted modern business practice.

‘We are pleased that the OFT is advocating the removal of obstacles to forming multidisciplinary practices. We have long been advocates of the benefits of bringing professional services under one roof,’ he said.

Links

OFT report into competition in the professions

ICAEW prepares for OFT report

Accountants to be spared by OFT

Firms’ public records off OFT agenda

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