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Auditing giants facing prospect of OFT competition probe

The UK's 'Big Four' audit firms -responsible for checking the books of 99% of FTSE 100 companies - are facing a competition probe after the consumer watchdog decided there were problems with the market.

The Office of Fair Trading (OFT) said there were features of the audit market - dominated by KPMG, Deloitte, Ernst -amp; Young and PricewaterhouseCoopers - which "restrict, distort or prevent" competition in the UK.

The OFT said there was enough evidence to justify a referral to the Competition Commission but would discuss with parties to see if remedies exist to allow these issues to be resolved.

The move comes after the House of Lords Economic Affairs Committee said the OFT should review the Big Four amid concerns their complacency contributed to the financial crisis.

The OFT said much of the evidence it had considered was reflected in the report from the Economic Affairs Committee, which said the failure of auditors to maintain sufficient dialogue with regulators ahead of the banking crash of 2008/09 amounted to a "dereliction of duty".

A KPMG spokesman said: "KPMG believes that there is already effective competition and pricing in the UK audit market, and look forward to hearing from the OFT its reasons for believing otherwise."

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