PwC fined £2.3m over subprime lender audits

The FRC found that PwC issued unqualified audit opinions, following claims from Cattles in 2009 that Welcome's loan book was much weaker than stated in PwC’s audit.

PwC faced a record fine of £3.5m but this was reduced to £2.3 after mitigation and a settlement discount.

Audit engagement partner Simon Bradburn was also handed a £75,600 fine, and both parties received a "severe reprimand" according to the FRC.
 
PwC and Mr Bradburn admitted that their conduct "fell significantly short of the standards reasonably to be expected of a Member Firm and a Member".
 
Gareth Rees QC, the Executive Counsel to the FRC, said: “The substantial fines imposed in this case reflect the seriousness of the audit failings in relation to the critical area of impairment provisioning in a sub-prime lender and will send a strong signal to the audit community of the importance of upholding high standards of professional conduct in audit work.

"I welcome PwC’s and Mr Bradburn’s constructive approach which has enabled us to reach this settlement. The admissions of misconduct have resulted in a significant saving in time and costs and the fines ultimately imposed have been reduced accordingly.”