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06 Sept 2025
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06 Sept 2025
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Accounting giant PwC has been fined £15 million by the financial watchdog for failing to report suspected fraud at failed minibonds firm London Capital and Finance (LCF).
The Financial Conduct Authority (FCA) said it was the first time the regulator has fined an audit firm.
The regulator’s boss said PwC identified a “number of red flags” but failed to act immediately on them.
The watchdog reported on Friday that PwC encountered “significant issues” over a 2016 audit of LCF, including the minibonds firm providing the auditor with “inaccurate and misleading information”.
We've fined PwC for failing to report their belief that London Capital & Finance (LCF) might be involved in fraudulent activity.#FinancialRegulation #FinancialServiceshttps://t.co/w8HZE4BkSm
— Financial Conduct Authority (@TheFCA) August 16, 2024
It found that LCF’s actions, and PwC’s own work on the audit, led PwC to suspect that LCF might be involved in fraudulent activity, but it failed to report these suspicions to the FCA “as soon as possible”.
PwC was ultimately satisfied it had completed an “accurate” audit in 2016 but it still had an obligation to report its concerns over possible fraud.
LCF collapsed in early 2019 after it was unable to meet the payments it had promised to bondholders on high-risk, unregulated investments, owing about £237 million to nearly 12,000 people, many of them elderly.
The Financial Reporting Council (FRC), the accounting watchdog, fined PwC and rival EY earlier this year with multimillion pound penalties over failures in their audits of LCF.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Auditors have a central role to play in keeping our markets clean.
“They have privileged access to information and they are required by law to report suspicions of fraud to the FCA.
“There were a number of red flags that led PwC to suspect fraud. They should have acted on them immediately.
“Their failure to do so deprived the FCA of potentially vital information.”
A PwC spokeswoman said: “We have reached a settlement with the FCA to resolve an unintentional reporting breach.”
The Serious Fraud Office has an open criminal investigation into the failure of LCF.
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