PwC Capital has been fined £15 million by the Financial Conduct Authority (FCA) after failing to tell the regulator about suspected fraudulent activity at London Capital & Finance (LCF).
This makes it the first auditor to be fined by Britain’s financial watchdog, with the FCA noting PwC had encountered significant issues when inspecting the books at LCF in 2016.
LCF collapsed in 2019, seeing thousands of savers’ investments wiped out after so-called “mini-bonds” promising 8% returns saw funds poured into highly-speculative projects.
These included property developments and oil exploration off the Faroe Islands, with funds also going to bond marketeers’ commissions and a new helicopter for an LCF subsidiary.
Some £236 million was spent on such bonds by over 11,000 investors.
“LCF’s actions, and PwC’s own work on the audit, led PwC to suspect that LCF might be involved in fraudulent activity,” the FCA said on Friday.
“PwC was duty bound to report those suspicions to the FCA as soon as possible, but they failed to do so.”