The external auditor plays a crucial role in overseeing the UK banking system by ensuring financial statements are accurate and reliable. While regulators focus on financial stability and investor protection, auditors serve the interests of a company's shareholders. There is a concern about auditor independence due to the significant fees earned from non-audit services, potentially leading to conflicts of interest. Efforts have been made to improve audit independence, but ongoing reviews and enhancements are necessary. The external auditor can assist regulators like the FSA in supervising and enforcing regulations to mitigate risks in the banking system.