Accountancy’s watchdog has closed a three-year investigation into Barclays’ auditor PwC, after deciding there was “not a realistic prospect” of winning a tribunal.
The Financial Reporting Council (FRC) launched an investigation in September 2014 into PwC’s role in reporting the bank’s compliance, between 2007 and 2011, with what was then the Financial Services Authority’s (FSA) client asset rules.
Barclays was fined more than £1m in 2011 by the FSA for mixing Barclays Capital money and up to £752m in client funds on an intraday basis for several years—despite segregating the money at night. The “mixing” of money caused major problems during Lehmans Brothers’ collapse, with clients unable to access their funds.
The Financial Conduct Authority, which replaced the FSA, then fined Barclays £38m in 2014 for “failing to properly protect clients’ custody assets” worth £16.5bn. A number of other investment firms were fined for similar failings, including BlackRock and Aberdeen Asset Management.
The FRC stated today: “Executive counsel to the FRC has concluded that there is not a realistic prospect that a tribunal would make an adverse finding against PwC LLP in respect of the matters within the scope of the investigation.”
Its announcement swiftly follows the September closure of the investigation into KPMG’s audit of HBOS for the year ended 31 December 2007. The 15-month investigation looked at how KPMG had considered the appropriateness of HBOS management’s assumption on going concern, and whether there were material uncertainties about its ability to continue that should have been disclosed in its financial statements.