FRC drops PwC probe over Barclays client money scandal

The FRC said it was unlikely to make an “adverse finding” following its three-year investigation launched after the bank was fined £37.7m for failing to keep client money separate from its own.

The news follows last month’s decision from the FRC that it had similarly cleared KPMG over that ‘big four’ firm’s conduct during its audit of HBOS in the months immediately prior to the bank’s collapse at the height of the financial crisis.

That decision brought into question the accountancy watchdog’s impartiality as it was highlighted that 11 of the ‘Big Four’ firm’s present or former partners serve in key FRC decision-making positions.

The latest decision comes after FRC investigated PwC’s reporting to the FSA on Barclays’ compliance with client money rules between 2007 and 2012.

A statement from the FRC said: “The executive counsel to the FRC has concluded that there is not a realistic prospect that a tribunal would make an adverse finding against PwC in respect of the matters within the scope of the investigation.”

A PwC spokesperson told the The Financial Times: “We co-operated fully ​during the FRC​’s​ thorough ​investigation and are pleased that​ ​the FRC has closed it without any further action.”

In August, PwC was fined £5.1m by the FRC over its audit of RSM Tenon – which was acquired by Baker Tilly in 2013 before being bought by Towry a year later – ahead of the professional services firm going into administration.

In the same month the FRC fined the accounting firm £2.3m for mishandling the auditing of failed sub-prime lender Cattles and its subsidiary Welcome Financial Services.