PwC hits back at investor call for curbs on Big Four audit firms

The country's biggest accountancy firm hit back at criticism by the Association of British Insurers about the dominance of just four auditors yesterday.

PricewaterhouseCoopers dismissed a call by the ABI for leading audit firms to divest clients should they build an "excessive" market share as "pretty brainless".

It said the trade body's response to a consultation by the auditing regulator threatened, rather than safeguarded, members' interests. The ABI is concerned about the effect dominance by the Big Four auditors - PwC, KPMG, Ernst & Young and Deloitte - could have on the price and reliability of the checking of company accounts, and the pressure so few big players could exert on regulators.

The four audit all but one of the companies in the FTSE 100, and 97 per cent of those in the FTSE 250.

The ABI, which represents shareholders that control about a fifth of the UK stock market, said: "It should be clear to the large accounting firms that, if their share of the market is deemed to be excessive, they will be obliged to divest part of their business."

PwC, which generates revenues of about £2bn from all activities in the UK, insisted that the four major auditors constituted "an ample choice" for Britain's biggest companies.

Multinationals, with a variety of disparate operations across many countries, require auditors with similar global reach and expertise, PwC said. Forcing the Big Four to divest clients or companies to use other auditors would make no sense and risks less reliable checking of their books. Peter Wyman, the head of professional affairs at PwC, said: "It [the ABI's submission] is pretty brainless. What the ABI and I have in common is that we both want companies to be properly audited ... But they are just missing the point. If there was a problem, the market would demand a solution. Don't forget, we're talking about some of the most powerful companies in the world."

Mr Wyman said smaller companies not requiring the Big Four's breadth and depth of expertise already have a greater choice, and questioned whether a market of about only 300 major companies could support other suppliers.

A spokesman for Deloitte said: "It is difficult to maintain that having more than four firms is not desirable, but artificial actions are not the answer. The answer is for other firms to invest in growth to create scale. They must invest heavily in the way the Big Four have in those areas which would enable them to take on large complex global audits."

The ABI's aggressive response to the Financial Reporting Council called for greater vigilance from competition watchdogs at home and across Europe.