EY agrees split into separate audit and advisory firms

British financial services giant EY has agreed to split into separate audit and advisory units, with the latter business set for a stock market listing.

The move, which was confirmed on Thursday and is aimed at accelerating growth and avoiding conflicts of interest, still needs the approval of EY's 13,000 worldwide partners.

EY operations in China are not part of the split.

"EY's strategic review of its businesses has progressed, and EY leaders have reached the decision to move forward with partner votes to separate into two distinct, multidisciplinary organisations," a statement said.

"The next steps include ongoing engagement with partners to provide them with more information in advance of the voting process."

EY added that it expects voting on a country-by-country basis to conclude by the start of next year.

The split comes following a UK clampdown on the nation's audit sector that is dominated by the "big four" comprising also Deloitte, KPMG and PwC.

Britain in May unveiled long-awaited reforms to the country's corporate reporting and audit regime via a new regulator after a swathe of high-profile bankruptcies -- although the revamp is a watered-down version of an originally mooted shake-up.

The audit sector has been criticised for failing to forecast the shocking bankruptcies of the BHS retail chain in 2016 (PwC), the construction group Carillion in 2018 (KPMG) and tour operator Thomas Cook in 2019 (EY).

The British government's plans are designed to break the stranglehold of the big four auditors -- but lofty initial ambitions have been scaled back in the face of a backlash from private business.

The Financial Reporting Council will be replaced by a new, stronger regulator -- the Audit, Reporting and Governance Authority (ARGA) -- with tougher enforcement powers and funded by a levy on industry.

And ARGA will have the power to require other large firms to follow in the footsteps of EY by splitting services if deemed necessary.