§ Mr. Cousins
To ask the Secretary of State for Trade and Industry whether he is considering proposing legislation to require the auditors' terms in office for banks and insurance companies to be rotated every five years; and what representations he has so far received on this matter from accountants or bodies linked to the accountancy profession.
§ Mr. Redwood
We have no plans for such legislation. Responses to two recent consultation exercises were overwhelmingly against requiring companies to change auditors at regular intervals on the grounds that it would increase costs and make audits less effective as each new set of auditors would have to start from scratch in building up knowledge about the client which is essential if the audit is to be effective.