§ Mr. CaplinTo ask the Chancellor of the Exchequer if he will make a statement on how the forthcoming legislation reforming the regulatory system for financial services will affect the role of auditors and actuaries. [39559]
§ Mrs. LiddellThe relationship between auditors, actuaries and the regulators is an important feature of the supervisory system in the UK. The financial services regulators take into account the role and responsibilities of both auditors and actuaries when determining the appropriate nature and intensity of regulatory supervision both at firm and industry level. I intend that the proposed new legislation to be published in the Summer will build on, and strengthen, this special relationship.
As now, the Financial Services Authority (FSA) will continue to be able to make rules requiring authorised firms to appoint an auditor where they are not already under a duty to do so. The legislation will also allow the FSA to make rules regarding the appointment of actuaries on the same basis. Where there is a need for an investigation or report on any aspect of an authorised firm's business, the FSA will continue to be able to either appoint, or require firms to use the services of, a qualified auditor, actuary or other professional.
I also propose that the FSA's current powers to sanction auditors should be extended to cover actuaries. This will allow the FSA to disqualify an auditor or actuary from 632W being the auditor or actuary of any firm regulated by the FSA for a specified period where they have failed to inform the regulator about matters of regulatory concern uncovered in the course of their duties. The provisions which disapply any confidentiality requirements an auditor might breach in passing on such information would also be extended to actuaries. Although I would expect this to be a little used power, it is vital that the FSA should be able to rely on auditors and actuaries, with their expertise and special access to information, to let them know of any such concerns.