Watchdog will come clean on ties with KPMG

A WATCHDOG will reveal for the first time its links with the accounting firms it regulates, in a victory for the Mail.

The Financial Reporting Council has agreed to publish a register of employees’ interests after it was slammed for being stuffed with staff who formerly worked for auditors.

It follows years of criticism over the cosy relationship between big firms and the FRC, which is supposed to hold them to account.

MPs and City insiders last week lashed out at the watchdog’s decision to clear KPMG of any wrongdoing over its failure to spot looming disaster in the books of toxic bank HBOS, which collapsed during the financial crisis.

The Mail revealed how at least three former KPMG staff served on the FRC committee which oversaw the investigation into its HBOS audit.

And the watchdog’s chairman is grandee Sir Win Bischoff – who from 2009 to 2014 was chairman of Lloyds, the bank which rescued HBOS after its collapse.

At the FRC’s annual open meeting, Bischoff said a register of interests for all members of the regulator’s board, committees and councils will be published next month.

‘Such a register is important for the FRC to retain confidence in how it reaches decisions, particularly on enforcement matters,’ he said.

‘The decision announced earlier this week to end the investigation into KPMG’s audit of HBOS has been questioned by media and politicians, and it has attracted questions about our independence.

‘It is vital that these decisions are taken based on the available evidence rather than on political considerations or public clamour.’

However, the banker defended the watchdog’s behaviour, arguing that there are already tough rules around conflicts of interest.

Critics of the revolving door between watchdogs and big business include former City minister Lord Myners.

‘Issues of perception always arise when a regulator makes a decision involving a firm where its senior directors were employed,’ the former Labour minister said last week, adding that watchdogs often felt compelled to hire such people to access their expertise.