Britain proposed weakening the market grip of Big Four auditors on Thursday and making company directors responsible for spotting fraud after the collapses of retailer BHS and builder Carillion.

Directors would have to repay bonuses if their company went bust or serious failings came to light, and dividends and bonuses would have to be stopped if firms didnt have enough cash a lesson from the Carillion collapse.

The longawaited proposals, put out to a fourmonth public consultation, implement the bulk of recommendations made in three governmentbacked reports on audit market competition, regulation and corporate governance.

Its clear from largescale collapses like Thomas Cook, Carillion and BHS that Britains audit regime needs to be modernised with a package of sensible, proportionate reforms, business minister Kwasi Kwarteng said in a statement.

Some of the proposals are already being introduced in voluntary form, such as operational separation of audit and more lucrative consultancy work at PwC, Deloitte, KPMG and EY the Big Four firms that dominate auditing of bluechip UK companies.

The Financial Reporting Council, criticised by lawmakers for being too timid in regulating auditors, is already undergoing an internal transformation to become the more powerful Audit, Reporting and Governance Authority or ARGA, proposed on Thursday.

The government proposed that smaller audit firms undertake a meaningful portion of a big company audit, stopping short of the joint…