MEPs said the plans from the European Commission were “a costly and unwelcome intervention in the audit market”, and instead backed a more modest plan for mandatory rotation every 25 years.
The legal affairs committee also dismissed a planned ban on auditors carrying out non-audit work for clients, a rule that could have forced the break-up of the Big Four’s businesses.
The news comes as a relief to the Big Four accountancy groups, which audit all but one of the FTSE 100.
PwC regulatory affairs head Pauline Wallace said mandatory rotation “prevents company audit committees from making the decision about who they should appoint as auditor”.
Yesterday’s vote sends the reforms back for discussions with EU states, with a parliamentary vote on a final text expected later this year.
However, the committee has backed the proposed prohibition of Big Four-only contractual clauses, which restrict a firm’s audit work to a small pool of accountants.
The UK Competition Commission in February raised the prospect of mandatory rotation, a measure opposed by large audit firms.