The Office for Fair Trading has referred the audit market to the Competition Commission.
The continued dominance of the so-called Big Four accountants is at the heart of probe.
The watchdog estimates that in 2010 PwC, KPMG, Deloitte and Ernst & Young, earned 99 per cent of audit fees paid by FTSE 100 companies, while between 2002 and 2010 only 2.3 per cent of FTSE 100 firms changed their auditor.
But Michael Izza of the Institute of Chartered Accountants in England and Wales said: “The audit profession is also awaiting publication of legislative and regulatory proposals by the European Commission.
"We are concerned that, with two separate processes underway that could both have a significant impact, the profession could be distracted from the important role that it is playing in helping rebuild the economy and drive growth.”