Ernst & Young won contracts worth £2.2m from the Financial Services
Authority during a six month period which saw the firm block the regulator from
receiving a disciplinary report on its conduct as auditor of Equitable Life.
Between December 2008 and June 2009, E&Y took legal action to prevent the
report into its audit of the troubled life insurer from being sent to the FSA.
During that time, E&Y won five contracts from the regulator.
Details of the contracts were obtained from the FSA under the Freedom of
The largest, in connection with an enforcement investigation, valued at
£1.85m was put out to tender on 13 March and closed 25 March. It was awarded on
The disciplinary report, produced by a tribunal of the Accountants’ Joint
Disciplinary Scheme (JDS), followed an investigation into E&Y’s audit of
Equitable Life between 1994 and 2000.
The investigation was concluded in 2004, at which time the JDS said that a
“report will be published” following a tribunal hearing. But the report was
blocked after E&Y sought an injunction in December last year.
E&Y said the JDS should not have tried to send the report to the FSA
until all appeal avenues were exhausted.
Its injunction was overturned in June by the High Court.
The report has since been sent to the FSA, but has still not been made public
while E&Y wraps up an appeal against the report’s findings. The report could
be made public as early as next year.
E&Y said the matters in the report had “no bearing” on its relationship
with the FSA.
“For many years Ernst & Young has worked closely with the FSA. The
matters raised in the JDS report have no bearing on our continuing strong
relationship with the FSA, and were not a consideration in our decision to seek
the injunction,” the firm said.
“To suggest otherwise is incorrect and misleading.”
The FSA would not comment on the E&Y case. However a spokesman said in a
statement that the FSA takes into account cost and experience, among a range of
factors when it hands out contracts.
“However, there are some occasions where a tender process is not appropriate,
this could be for a range of reasons, including the urgency of the project,
specialist knowledge, contextual knowledge of a particular company would be of
benefit, continuity of service or because of ownership of intellectual
property,” he said.
Liz Kwantes, co-ordinator of Equitable Life Members Support Group, said that
E&Y’s actions give rise to a potential conflict of interest.
“It leaves one breathless,” she said. “One really does begin to think that
there is a conflict.”
FSA contracts won by E&Y
£1.85m Consultancy 15/05/2009
£185k IT manager 24/03/2009
£115k Consultancy 29/01/2009
£30k Testing 18/06/2009
£25k Consultancy 19/06/2009
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