Danny McCance 1 Apr 2019 02:07pm

Three auditors in three years for LCF

In the few years prior to the collapse of London Capital & Finance (LCF) the company switched between three separate auditors

The savings company, which is under investigation by the Serious Fraud Office and the Financial Conduct Authority (FCA), collapsed into administration in January this year with £237m worth of investments.

Big Four firm EY was external auditor for LCF for the 2016/2017 accounts taking over from fellow Big Four firm PwC which audited the accounts for the 2015/2016 financial year.

PwC had taken over from Oliver Clive & Co, which had audited the company’s accounts for the previous year, according to Companies House filings.

Administrators Smith & Williamson were appointed 30 January 2019 and later released a report stating that there were “a number of highly suspicious transactions by a small group of connected people which have led to large sums of bondolders’ money ending up in their personal possession or control”.

In December the FCA directed the company to immediately withdraw promotional materials in relation to the sale of mini-bonds on the basis that they may be misleading, not fair or unclear.

Further to this, expert analysis reported by the Financial Times last week found that the company had been “technically insolvent” for at least two years.

The analysis suggested that the company’s investments were unlikely to provide enough to pay off the debts it had accrued and it was therefore technically insolvent according to its balance sheet.

This matter was not referenced in the auditors’ reports in LCF’s full accounts for the periods in question.

Adam Stephens, a partner at Smith and Williamson and administrator for LCF, said that administrators have already made contact with EY and are seeking to undertake an investigation.

A spokesperson for EY said: “It’s not our policy to comment on the companies we audit.”

A PwC spokesperson declined to comment.

Oliver Clive & Co has been contacted for comment.