Britain's Financial Services Authority has warned that the dominance of the so-called Big Four accounting firms, and the problems regulating them, could present problems for market confidence. In its International Regulatory Outlook report, the FSA warned: "There is now a potentially significant risk to international and domestic markets' market confidence that could crystallise were the collective reputation of the so-called 'Big Four' to be collectively impaired, or were there to be a major problem at one of the firms leading to a contraction to three.''

Apart from the concentration of power, the FSA notes that the problem is that these firms have global brands and structures built around local partnerships and subject to local laws. But the problem for regulators is that they don't have the scope to regulate the whole firm and that they can only focus on the local part. "There is now a growing debate among national regulators relating to the oversight of - and risks to markets arising from the market dominance of and resulting reliance on - the "Big Four" accounting and audit firms."

Truth is the reputation of the Big Four - PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte - has taken a battering and has not recovered since the implosion of Andersen and the accounting scandals that started with Enron. Public Company Accounting Oversight Board chairman William McDonough has warned that accountants might never win back public trust after those accounting scandals.Only last week, the Public Company Accounting Oversight Board found deficiencies in the audits carried out by PwC and Ernst & Young. But are they actually in danger? Think of how KPMG was saved by the Bush administration over its peddling of abusive tax schemes. Terrified of letting another accounting firm, the administration could in effect be giving these firms a free pass.

Meanwhile the merger of Global Alliance and Moore Stephens North America, Incorporated has created one of the world's biggest accounting firms based on revenues, something that some commentators say could rival the Big Four . But would that be enough? Are the Big Four Too powerful? How does one deal with the problem without it affecting market confidence?