KPMG financial services consulting suffers further resignations

17 September 2019 5 min. read
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KPMG’s financial services consulting line has been left in disarray, after two senior consultants announced they were quitting the Big Four firm following the ousting of Tim Howarth. The duo reported to Howarth, who ran the unit but was forced out following an investigation into his conduct in August.

As a Partner and UK Head of Financial Services Consulting, Tim Howarth ran KPMG’s risk consulting practice, which advises company boards on managing risks such as fraud and financial crime, regulatory compliance, cyber-attacks and corporate governance. He was also understood to have been lead Partner for one of the firm’s largest clients, Lloyds Banking Group. However, after an investigation into the conduct of the Senior Partner on messaging application Whatsapp, Howarth was forced out of the firm with immediate effect.

Commenting on his dismissal, Howarth expressed his surprise at what he labelled a “bizarre decision”, claiming it was still “under appeal.” Howarth is the third Senior Partner to be investigated by KPMG in 2019 over claims of misconduct, amid what has fast become a reputational crisis for the Big Four member. KPMG’s reputation had sustained self-inflicted wounds earlier in the summer due to a protracted “bullying” storm relating to the behaviour of Senior Partner Sanjay Thakkar – something which may account for the swiftness of Howarth's departure.

KPMG financial services consulting suffers further resignations

However, KPMG now seems to be suffering a pushback for its attempts to quickly address the issue of workplace culture, with two senior financial services consultants exiting the firm’s UK wing at the end of the month. Head of Financial Risk Management Mike Walters, and Harps Sidhu, KPMG’s Head of Capital Markets Consulting, both reported to Howarth, and according to the Financial Times the exiling of their former boss may have prompted their exit, leaving the practice in disarray.

An insider close to the story reportedly told the UK financial newspaper “the core leadership of one of the most profitable areas of the business has just been taken out,” leaving people wondering what will happen to their careers, as the three senior exits had “knocked out the effective chain of leadership” within the firm’s financial services consulting division, which has since become “a bit of a disaster zone.”

Including both advisory and audit, KPMG’s financial services work made revenues of £681 million in 2018, making it one of the firm’s largest business lines. The triple exit is particularly poorly timed for KPMG, as the 70-Partner financial services consulting division also recently lost its Head of the Financial Services Internal Audit. Having only joined in January 2018, Jonathan Calvert-Davies is leaving for a role with HSBC in October.

The source also told the Financial Times that since the incident involving Sanjay Thakkar, Partner infighting had increased. This could suggest that the exit of Walters and Sidhu is related to that breakdown in relations. The insider stated KPMG was “not a happy place to work at the moment,” and that during the investigation into Tim Howarth, many Partners “thought it was wise not to speak to each other or to Tim during that time.”

'Macho' working culture

Elsewhere, the two Partners who left KPMG in protest of the firm seemingly defending Sanjay Thakkar have launched their own rival consultancy. Eos Deal Advisory, which takes its name from the Greek goddess of dawn, is aiming to break the “macho” working culture in the business consulting industry.

Maggie Brereton, who was a board member and head of UK transaction services at the accountancy giant, and Ina Kjaer, who was the Big Four auditor's head of UK integration in the deal advisory team, objected to how KPMG had handled alleged bullying by deal advisory boss Sanjay Thakkar, amid claims the firm sought to protect high-ranking individuals who were close to senior leadership.

The new firm intends not to have a gender pay gap from its very launch, a key contrast to its major peers where men tend to be paid at least 20% more than women. This is something which may well give it an advantage when competing for recruits in a tightening labour market, and a factor that will no doubt help meet its target of hiring 15 staff in the UK by the beginning of October. Speaking to the Financial Times, Brereton told the paper that Eos will reshape the deal advisory market by employing a diverse range of staff and eschewing the industry's standard practice of long working hours.

She added, “The business will allow minorities and women who walked out of the [deal advisory] market to feel like they want to work in it. We will bring proper diversity into this market.”