MICHEL Barnier, the European commissioner, is widely expected to postpone the publication of draft legislation designed to clamp down on the market dominance of the “big four” accountancy firms next week.
Barnier was planning to propose controversial changes to auditing rules to prevent potential conflicts of interest and boost competition.
But the draft regulations are now likely to be pushed back, potentially until the end of the month, in favour of a review of economic governance in the Eurozone’s less competitive economies.
A delay would be a worrying signal that the workload of the Eurozone crisis is colliding with the flurry of regulatory change the EU is pursuing.
City A.M. understands that the UK is becoming increasingly concerned that the EU is trying to rush through too much regulatory change at once during such a severe debt crisis.
In particular, HM Treasury is worried the measures are not being properly scrutinised and that the European Commission is over-burdening the new supra-national agencies it set up in January (such as the European Banking Authority), which lack enough staff to deal with the workload.
The auditing regulations are highly anticipated in the City, where thousands are employed by the “big four”: Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers.
In order to shake up what he calls an “oligopoly”, Barnier wants companies to change their auditors every nine years, and wants changes to the tendering procedure to increase competition. Firms providing auditing services would also be banned from providing other services.
But yesterday, Barnier’s office told City A.M. that the proposals could be delayed due to work on the Eurozone crisis taking precedence.