The Big Four auditors are discussing a radical initiative that would send early warning signs of companies’ financial troubles to UK regulators, according to two people at the firms.

Representatives from the accounting firms are lobbying Sir John Kingman, who is in the process of reviewing the sector’s regulator, to introduce a so-called ‘red flag coalition’. The proposed system would enable the largest firms to openly disclose to regulators upcoming risks in specific sectors or companies. That, in turn, would help regulators better prepare for large corporate failures.