PwC fined £2.9m over audit of Sanjeev Gupta’s Wyelands Bank

PwC has been fined £2.9 million by the UK accounting watchdog over its audit of Sanjeev Gupta’s collapsed Wyelands Bank.

The Financial Reporting Council (FRC) said on Tuesday that there were “serious failings” by the Big Four financial services group.

It said PwC breached requirements in six areas of the audit of Wyelands’ 2019 accounts, including risk assessments and its audits of related party transactions.

The banking firm was founded in 1980 but acquired by steel magnate Sanjeev Gupta in 2016, before being brought into his GFG Alliance group of firms.

The Prudential Regulation Authority (PRA) ordered the lender to repay customer deposits in 2021 amid concerns over its financial position following the collapse of Greensill Capital.

Jonathan Hinchliffe, the PwC partner who oversaw the audit, was fined £33,412 by the regulator.

Claudia Mortimore, deputy executive counsel at the FRC, said: “The audit breaches in this case highlight the importance for auditors to have a full understanding of the audited entity and its business.

“This is particularly important where there has been a change of ownership and change in the nature and scale of activities.

“In this audit, the risks around the bank’s membership of and involvement with the GFG Alliance were not properly recognised and considered, despite clear warnings to the bank from the PRA.

“This led to a number of serious failings, which had the potential to adversely affect retail depositors.”

PwC’s overall sanction was reduced from £4.5 million due to cooperation and admissions by the company.

A PwC spokeswoman said: “We acknowledge and apologise that aspects of this piece of work fell short of the required standards.

“Since 2019 we have undertaken a multi-year programme to enhance audit quality and have, as a result, seen significant changes to our audit practice.

“Recent supervision reports reflect the improvement and investment made in audit quality, which remains our top priority.”