The Liberal Democrats accused the firm of a conflict of interest, because it earned money in fees for helping the crisis-hit lender sell on its loans and borrow funds in the wholesale markets as well as for auditing its business.
The bank’s annual report disclosed that PwC was paid £500,000 in 2006 for its audit work compared to £700,000 in ‘non-audit fees’, specifically ‘in respect of securitisation transactions and the raising of wholesale funding’.
Sources within the firm said, however, that the concerns were a ‘non-starter’ and that work was standard by an auditor for a client.
‘It is all audit-related work typical of us as auditors,’ said one source. ‘We’ve heard nothing following the reports.’
Speaking earlier this week, Vincent Cable, Lib Dem Treasury spokesman, said: ‘This appears to be a serious conflict of interest. I would worry about the fact that the auditor appears to be making enormous fees from what turned out to be the most disastrous aspects of the Northern Rock situation.’
Northern Rock was forced to go cap in hand to the Bank of England, after it was caught out by its dependence on short-term borrowing as the credit crunch, sparked by the upheaval in the US sub-prime housing market, took hold.
A PwC spokeswoman said: ‘We can’t talk about client affairs.’
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