The whistleblower whose evidence was at the heart of last week's damning report into the collapse of HBOS has called for a "complete overhaul" of the auditing of banks in the wake of criticism of Big Four accountants KPMG and PricewaterhouseCoopers (PwC).

Paul Moore was HBOS's head of group regulatory risk until he was effectively sacked by chief executive Sir James Crosby in 2004. He cited "obvious conflicts of interest" identified by the Parliamentary Commission on Banking Standards (PCBS) between the oversight provided by accountancy giants and their commercial relationship with the bank as auditors.

Moore told the Sunday Herald: "KPMG were the bank's auditors. What were they doing [also] looking at my whistle-blowing allegations? They have a whole range of questions to answer. The Big Four accountants have a monopoly that has to be broken up and changed completely, with audit and non-audit functions entirely split up.

"The whole regulatory system for auditing and accounting needs to be changed so that the auditors are required to blow the whistle themselves more readily than they have so far."

Moore, who was praised by PCBS chairman Andrew Tyrie as "a valuable whistleblower at a difficult early stage in this whole process" cited references in the report to KPMG and PwC investigations in response to FSA concerns about HBOS. The FSA was reported to see the bank years before its collapse as "an accident waiting to happen" – also the title of last week's report.

This flagging up of potential risky lending led to a KPMG review of the credit processes for the corporate division, while the FSA commissioned PwC to undertake a "skilled persons review" under section 166 of the Financial Services and Markets Act 2000 on the group's control framework and risk-management processes.

These reports made a number of recommendations, but effectively gave the bank a clean bill of health, with the second one concluding the risk-management processes within HBOS appeared "to work well"

In evidence to the committee last October, Moore said: "It is perfectly clear that KPMG could not have been independent in investigating my allegations—they were the auditors.

"We made complaints throughout the entire process about the way they conducted things. We wrote one rebuttal letter to the KPMG investigation, but the FSA never called me back in to say: 'Well, what do you say to the KPMG report?'

"The KPMG report did the opposite. In summary, it said that I was a lunatic and that they [HBOS] were right. So we have an entire system that doesn't really work."

Last week's report paints a damning picture of the management failures leading up to the collapse of the bank at the height of the UK banking crisis, estimating that 96% of shareholder value was wiped out when the bank collapsed, costing taxpayers £20.5 billion.

The commission concluded that former chief executives Crosby and Andy Hornby were mainly to blame for the collapse, together with former chairman, Lord Stevenson.

It says: "The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank's board from its birth to its death."

Lloyds Banking Group, formed from the merger of Lloyds TSB and HBOS in 2009, has since cut tens of thousands of jobs and is still 39% state-owned.

Moore said the trio, who have yet to comment publicly on the report, should "examine their consciences, publicly repent, and use the rest of their lives to make amends for misery they have caused".

"By now 32,000 have lost their jobs. I said at the time [of the collapse] that the estimate of 12,000 predicted job losses was far too conservative, and that the figure would probably be three times as many," he said.

While praising the Commission, which included notables such as former chancellor Lord Lawson, Lord McFall, and the Archbishop of Canterbury for the speed and thoroughness of its report, Moore criticised the report for failing to comment on the dual role of Crosby as chief executive of HBOS and senior member of the FSA.

"This is the biggest lacuna [missing section] in the report – I don't know why it wasn't picked up," he said. "Crosby was a non-exec from 2004, then became deputy chairman on November 20. Any further work in relation to this aspect of HBOS must be taken away from the part of the [FSA successor body] Financial Conduct Authority that has inherited the responsibilities from the FSA."

A spokesman for KPMG said: "We stand by the quality of our work in regards to HBOS."