The fine dwarfs the previous record of £1.4m, handed out to PwC by the FRC in 2011 over its role as auditors of JP Morgan .
The FRC published its long-awaited final report today, following an independent tribunal into the conduct of Deloitte & Touche and partner Maghsoud Einollahi in July.
Along with the fine, Deloitte was also severley reprimanded, while Einollahi has been excluded from the profession for three years and fined £250,000.
The FRC said the decision will “send a strong and clear message to all members of the accountancy profession about their responsibility to act in the public interest and comply with their code of ethics.”
Deloitte said it was “disappointed” with the outcome. In last month’s annual reports, Deloitte said it would not rule out an appeal against the judgment. It now has 28 days to appeal against the judgment.
A Deloitte spokesperson said, “We remain disappointed with the outcome of the Tribunal and disagree with its main conclusions. As a firm we take our public interest obligations seriously in everything we do. We are disappointed that the efforts we and others made did not successfully secure the long-term future of the MG Rover Group. The quality of our work, carried out more than 10 years ago, has not been criticised, but the Tribunal found against us on a number of points.
“This could have negative implications for the advice that can be provided by ICAEW member firms and members, both within the profession and business. Over the coming weeks, we will continue our discussions with relevant stakeholders and professional bodies about the potentially wide ranging impact on the profession and wider business community of the Tribunal findings.”
Paul George, FRC executive director conduct, said the report “should be essential reading for all members of the profession."
"The sanctions imposed are in line with the FRC’s aim to ensure penalties are proportionate and have the necessary deterrent effect to prevent misconduct and bolster public and market confidence,” he added.
The case focused on Deloitte partner Maghsoud Einollahi, who at the time was based in the firm’s Manchester office, and the ‘Phoenix Four’ – independent corporate finance advisers Peter Beale, Nick Stephenson, John Edwards and John Towers – and their short-lived ownership of MG.
Specifically certain transactions in which both Deloitte and Einollahi failed adequately to consider the public interest and a potential conflict of commercial interests between the Phoenix Four, MG Rover Group and associated companies and shareholders.
MG Rover collapsed in 2005 with debts of £1.3bn and the loss of 6,000 jobs, five years after the four, all directors of Phoenix Venture Holdings, had bought the group for £10.
Over that time, they had paid themselves £40m in pay and pensions.
The tribunal found that Deloitte and Einollahi showed in some instances a “persistent and deliberate disregard of the fundamental principles and statements of the ICAEW’s code of ethics.”
It also concluded Deloitte “put their own interests ahead of that of the public and compromised their own objectivity” and found "no evidence to suggest the public interest" had been "considered adequately at all."
The Tribunal found against Deloitte and Einollahi in all 13 allegations made by the FRC.