FSA in call for greater powers

THE Financial Services Authority is demanding a massive increase in its powers to investigate suspect accounts and guard against Enron-style scandals. The lead City regulator, which already has unprecedented powers to investigate and punish financial wrongdoers, wants the additional responsibility of enforcing good accounting practice.

FSA chairman Sir Howard Davies is understood to be pressing for it to take over the role currently handled by the Financial Reporting Review Panel.

While Britain has yet to produce an accounting scandal of the proportions of Enron or WorldCom, a string of British businesses recently admitted to accounting irregularities, including holidays firm MyTravel, contractor Amey and cidermaker HP Bulmer.

Davies' ambition is to gain powers similar to America's Securities and Exchange Commission, which already investigates accounting abuses as well as overseeing the entire securities industry. The panel, which has one full-time accountant compared with the SEC's 100, acts only after receiving complaints.

The Government would like to see a more proactive approach and has provisionally agreed that the FSA can conduct risk assessments to determine which accounts may need fuller investigation. The FSA said today: 'These things have been discussed. But it's a decision for Government.'

Panel chairman Richard Sykes warned last month that even if it became more proactive, it could never provide investors with complete reassurance about financial statements.