Budget2011: Big Four clause under the spotlight
Big Four clauses will be investigated by the government, after the OECD suggested banks are making business loans contingent on using a major auditor.
RESTRICTIVE BANK clauses that force businesses to use one of the Big Four auditors are finally coming under public scrutiny.
Smaller auditors have widely complained about the restrictive rules, but until now there has been little hard evidence of their existence.
The Office of Far trading has been ordered to investigate whether the clauses – typically found in banks’ lending agreements – are stifling competition in the market.
Steve Maslin, chair of Grant Thornton’s Partnership Oversight Board, described the restrictive banking covenants as “anti-competitive and a major factor preventing other audit firms from building their position in the market”.
He welcomed the OFT investigation, saying it will “create further impetus for change”, and claiming the issue is no longer whether the clauses exist, but how fast they can be removed.