PwC fined record £1.4m over bank auditing failure

The UK arm of accountancy firm PwC has been fined a record £1.4m after it failed to discover billions of dollars of client money had been ringfenced improperly at US bank J.P.Morgan Chase.

PwC told regulators that J.P.Morgan Securities, part of J.P.Morgan Chase, had complied with rules regarding the ringfencing of client money between 2002 and 2008.

But J.P.Morgan Securities was fined a record £33m by the FSA in 2010 for mistakenly placing as much as $23bn of client money with its own funds.

The fine for PwC was handed out after an independent tribunal adjudicated on an investigation made the Financial Reporting Council's Accountancy & Actuarial Discipline Board.

Though the fine is the largest handed out to a UK accountancy firm, the tribunal rejected the board's suggestion that any penalty should be based on PwC's profits, in keeping with the fine levied on J.P.Morgan Securities, saying this would have resulted in a £44m fine.

The tribunal added it was "surprised and concerned" no PwC partner had been pursued on the matter.

The fine was reduced from a proposed £2m because PwC had co-operated with the tribunal proceedings.