By Ana Gyorkos.

UK financial regulators have told the House of
Lords economics affairs committee that they want more power over
the accountancy market to prevent another collapse of the financial

While increased regulatory oversight might
have helped prevent the crisis, better communication between
regulators and auditors could hold the key to avoiding past
mistakes. Firms still feel there is some way to go before the
communication is at a desirable level.

When it comes to analysing mistakes leading up
to the financial crisis, there hasn’t yet been a great deal of
finger pointing among different parties. But in a way this poses a
problem forpost-crisis investigations, as areas where improvement
is necessary remain hidden from government or regulatory

“There use to be really good dialogue with the
regulators,” said Pauline Wallace, PwC UK’s head of public policy
and regulatory affairs. “I believe the emphasis might have changed
somewhat when the old Banking Act was replaced and that was when
the Financial Services Authority (FSA) was set up.

“It’s created a different supervisor’s
perspective as it has meant meetings that used to be common place
between auditors and supervisors ceased to happen to anything like
the same extent as they use to.”

Wallace believes there has been an improvement
in dialogue with the FSA but more can be done.

The committee was told last week that
improving communication is essential for regulators and analysing
the crisis helps them identify areas where more communication is

Grant Thornton UK chairman of the partnership
oversight board Steve Maslin said it is time to start looking

“Now, I think there has been much improved
dialogue between the FAS and audit firms. I think it still has a
way to go and I think what the bank would like to do is to get a
really simple communications framework to say this is how
communication between interested parties should look,” Maslin

“For example, this is a sort of dialogue that
we should be having between individual bank teams and the Bank of
England, and this is the communication we should be having with the
large audit firms. And then there is probably one or two meetings a
year at which the large audit firms and the bank would get together
just for a more general discussion about what are the pressure
points that are bubbling up in the industry.”

Whether the House of Lords enquiry is going to
help stimulate better communication and present an alternative
solution for the UK audit market is hard to predict at this stage.
However, there is a general feeling within the profession that
proposed changes at European level might lead to a more heavily
regulated audit market.