Angry MPs challenge regulators over BHS

Questions for Insolvency Service and audit watchdog

A GROUP of MPs have ramped up pressure on regulators to punish the directors of companies which collapse after accounting irregularities.

Frank Field, chair of the Work and Pensions Committee, is set to meet with the Insolvency Service which has announced it will not reopen its investigation into the downfall of BHS in 2016.

He wants its boss Sarah Albon to reveal more details of its probe, so he can assess why neither the Insolvency Service nor the Financial Reporting Council (FRC) were able to hold individual BHS directors to account for the catastrophe which left a £571m pensions black hole.

Field said: ‘It is difficult for the outside observer to understand why the Insolvency Service sees no reason for further action on what happened at BHS.

‘The current system apparently cannot prevent, capture or punish the conduct that ran BHS into the ground and left its pensioners well short of their entitlement.’

It comes as Parliament’s business select committee launched its own inquiry today into the future of audits, criticising the dominance of so-called Big Four accountants PwC, Deloitte, KPMG and Grant Thornton.

Rachel Reeves, chair of the committee, said: ‘The audit market is broken. The Big Four’s overwhelming market domination has failed to deliver audits which are fit-for-purpose. The lack of meaningful competition has bred conflicts of interest at every turn.’

The Government has already launched an independent review of the FRC, led by Sir John Kingman and due at the end of the year.

The role of the auditors was a major element in the BHS collapse. Just five days after major accountancy firm PwC rubberstamped the 2014 accounts of BHS’s then- parent company Taveta, owned by Sir Philip Green ( pictured), the business tycoon sold the company for just £1 to Dominic Chappell’s RAL Group.

Though PwC was fined a record £6.5m for its shoddy work over the audit, no Taveta directors who actually prepared the accounts were held responsible.

The Insolvency Service originally brought charges against Chappell and two of his colleagues, but found insufficient evidence to disqualify Green or any other Taveta directors.

It considered reopening its investigation earlier this year, after the FRC handed over evidence from its own probe. However, Albon decided there were no grounds for review.

Another investigation of the audit sector is being carried out by the Competition and Markets Authority.