Big Four fined more than £100 million by FRC over five years

The four largest audit and advisory firms in the UK have shelled out more than £100 million in fines over the last five years. At a time when those same companies are scrambling to safeguard their profitability, the sanctions from the Financial Reporting Authority are having a pronounced impact.

In 2019, the Kingman review recommended that the UK’s auditing watchdog should be replaced “as soon as possible”. In the five years leading up to that point, the Big Four’s share of FTSE 350 auditing had expanded from 95% to 98%, even as their failures were writ large across accounting scandals that had caused a number of major employers – including outsourcer Carillion – to collapse.

But while the Financial Reporting Council’s ability to moderate the accounting scene has continued to be called into question, little has changed yet. The long-awaited plan to reform the FRC into a new statutory regulator, was shelved by the Conservative government, which said it planned to simply focus on “growth and the UK’s competitiveness” – and while the Labour administration installed in 2024 has revived plans for the Audit, Reporting, and Governance Authority (ARGA), a clear timetable has still not emerged.

In the meantime, the FRC has forged ahead with its surviving remit – stinging the Big Four with hefty fines over the last five years. And while those firms might have previously shrugged off those sanctions, making such large revenues from their global activities that it seemed like the fine-centric FRC was ‘toothless’, Deloitte, PwC, EY and KPMG are now facing flagging profitability.

According to new research from CityAM, the FRC has fined the Big Four a pre-discounted £154 million over that period. And even while the majority of fines the FRC issues come with a discount, as firms admit to their mistakes, assist with investigations, or report themselves to the regulator, the discounted total still topped £115 million.

Taking the unwanted top-spot for Big Four auditing fines was KPMG. Over the five years in question, the data shown to CityAM suggests the firm was stung with 11 fines, and a pre-discount fee of over £81.8 million – including a hefty fee for the Carillion scandal. In 2023, the FRC found KPMG’s failures there had been “exceptional”, without a “rigorous and robust approach” – something which the firm eventually paid a reduced £18.5 million for. PwC meanwhile hit a pre-discount level of more than £34 million; Deloitte was billed over £19 million, and EY £18 million.

Beyond the fines the Big Four have repeatedly made headlines in the last year for their layoffs and reductions in compensation. For instance, KPMG – the leading firm for FRC fines – announced last year that it would shave 200 staff from its UK headcount, while second-placed PwC announced plans to make 100 staff redundant at the start of 2025, and to delay promotions of 100 juniors for a second consecutive year. EY and Deloitte have also announced similar plans. But staff being shown the door may wonder whether there would be such apparent pressure on profitability if it weren’t for the fines their employers kept incurring.