FRC publishes more information on ARGA’s competition powers and invites feedback

The FRC have published a policy paper that sets out further information on the regulator’s approach to competition in the audit market as it prepares to become the Audit, Reporting and Governance Authority (ARGA).

The UK government has previously set out plans for ARGA to have an objective to promote effective competition in the statutory audit market and that the regulator will be given wide-ranging powers to improve competition and choice in the audit market (for more details, click here). This paper sets out how the FRC is seeking to progress the UK government’s policy proposals and provides an update on recent developments on competition in the audit market. Notably, the FRC find that there have been no significant improvements in competition in the audit market since 2018 and there remains a high concentration of audits among four audit firms.

The paper also gives further clarity on how the FRC intends to progress the government's seven competition policy proposals as it transitions to ARGA and how it proposes to deliver on ARGA’s objective to promote effective competition in the audit market.

ARGA’s approach to its future competition powers will clearly have a significant impact on audit firms and how they deliver services. Proposed market opening measures will also affect the election and oversight of auditors by company Audit Committees.

Comments and feedback on the policy paper can be submitted by email to competition@frc.org.uk and are due by 28 February 2023.