Individuals fined and former Equity Syndicate director banned by watchdog
A financial watchdog has hit KPMG with a £6m fine and ’severely reprimanded’ it for reserving blunders in the Equity Syndicate.
The Financial Reporting Council took the action after an independent tribunal found a number of serious mistakes in the auditing of claims reserves at Equity Syndicate Management Limited (ESML) between 2007 and 2009.
- KPMG partner Mark Taylor has been fined £100,000 and a second partner will review his audits until the end of 2020
- Former KPMG partner Anthony Hulse has been fined £100,000
- Former Equity director Douglas Morgan has been excluded from membership of the Chartered Institute of Management Accountants (CIMA) for two years
The fines are the latest action taken against those managing and auditing the Lloyd’s Equity syndicate which had to be bailed out by its Australian parent after being hit by the perfect storm of poor reserving practices and a deluge of motor claims.
The tribunal found there were insufficient enquiries made by auditors into the claims management process. Auditors also failed to investigate properly why there was so little management action when the reserves were depleting so badly.
Morgan, came in for stinging criticism. Under his direction, syndicate claims reserves were reduced to meet a pre-determined target.
He failed to keep proper records and important information was not disclosed to the board or outside actuaries.
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