John McDonnell vows crackdown on accountancy industry ‘cartel’
John McDonnell has said a Labour government would stop the big six firms in accountancy and auditing from “acting like a cartel” following the Carillion scandal.
The Shadow Chancellor said the party will launch an independent review of the entire corporate auditing and accounting regime in the UK to stop existing firms preventing new market entrants or driving down standards.
The move would see Deloitte and KPMG, EY, PwC, Grant Thornton and BDO no longer being allowed to dominate the sector.
His comments come after last week’s scathing attack on the firm’s bosses by MPs, after they accused directors of being “too busy stuffing their mouths with gold” to save the firm.
The company, which employed around 20,000 people in the UK, went bust in January with debts totalling around £1.5bn and a shortfall of almost £600m in its pension fund.
Labour’s overhaul could see regulatory bodies merged, abolished or restructured, while a series of new fines and penalties will be brought in.
Mr McDonnell said Carillion's collapse showed accountants and auditors "seem to operate with impunity whilst lining their pockets".
"Our regulatory system is simply not fit for purpose," he told an audience at Labour’s State of the Economy conference.
"The financial sector alone has at least 29 overlapping regulators, including the Faculty Office of the Archbishop of Canterbury.
"Some professions are self regulated. This regulatory maze creates enormous opportunities for waste, duplication, obfuscation and buck-passing. It does not protect consumers or promote confidence.
"We need a complete overhaul of the entire regulatory framework for finance and business, to promote openness, transparency, accountability and - yes, where necessary - to impose appropriate punishments.
"There will be no more Carillion scandals on Labour's watch."
He added: "Under the next Labour government the big six firms will not be allowed to continue to act like a cartel that prevents new market entrants or drive down standards.
"Otherwise it will further infect the rest of our economy and business community."