The accountancy regulator should adopt a more open procurement policy when tendering for legal and professional services, a review assessing its clout has found.

Sir John Kingman, chair of insurance giant Legal & General, said the Financial Reporting Council (FRC) had failed to adopt an ‘open competitive approach’.

In a review published today, Kingman reports: ‘During the last three years, it [the FRC] has not tendered openly for the majority of its legal and professional services, the value of which has been over £2m. The review does not believe this approach is appropriate.’

According to the review, the regulator should establish a procurement policy adhering to public sector contracting regulations and following an open tendering process. The policy should be published, along with a summary of those contracts awarded that are above the public contracts regulation threshold (currently €221,000).

Kingman’s review was commissioned by the Department for Business, Energy and Industrial Strategy (BEIS). The review also recommended that the FRC is replaced ‘as soon as possible’ with a new independent regulator called the Audit, Reporting and Governance Authority (Arga) and that the government introduce a ’duty of alert’ for auditors to report serious concerns.

The BEIS select committee will assess the implementation of Kingman’s review. It will also consider a review published today by the Competition and Markets Authority (CMA) into the state of the UK auditing sector  – in particular the dominance of the so-called ‘big four’ professional services firms.

In the market study, the CMA proposes that auditing and professional services should be separated. It also calls for a ‘joint audit’ regime giving firms outside the ‘big four’ - Deloitte, EY, KPMG abd PwC - a role in auditing the UK’s biggest companies. A consultation on the plans is to be published.

The CMA report does not specifically mention the big four’s move into the legal services market. In a speech last month Lord Chancellor David Gauke welcomed that development as ‘providing additional choice for consumers’.