Campaigner vows to pursue every avenue to support 1,200 members of Silentnight pension scheme

A YORKSHIRE MP has stepped up demands for a new regulator after a professional membership body for chartered accountants declined his request to use a fine imposed on KPMG to compensate 1,200 pension scheme members.

Kevin Hollinrake, the co-chairman of the All Party Parliamentary Group on Fair Business Banking, has urged the ICAEW to pass on the fines levied on KPMG to the Silentnight Pension Scheme.

KPMG was fined £13m and severely reprimanded by the Financial Reporting Council (FRC) last year for breaches of conduct in respect of its work for the Silentnight group of companies. The fine related to the conduct of KPMG and one of its former partners from August 2010 to April 2011.

Sign up to our Business newsletter

Geoff Shaffer, who was a trustee of the Silentnight pension scheme for 30 years, said he was a member of a group of scheme members which is still trying to persuade the ICAEW to hand over the fines it received to the current Silentnight scheme trustees.

Kevin Hollinrake, the co-chairman of the All Party Parliamentary Group on Fair Business Banking, has urged the ICAEW to pass on the fines levied on KPMG to the Silentnight Pension Scheme."

He said: “This could have the effect of the scheme not having to enter the Pension Protection Fund, thereby producing improved benefits for all 1,200 members.”

Mr Shaffer added: “I won’t rest until every avenue has been pursued.”

Mr Hollinrake told The Yorkshire Post “The ICAEW rejected our request in no uncertain terms which we found very disappointing.

“To think that they are effectively arguing that their members, which include some of the biggest and wealthiest accountancy and audit practices in the UK, deserve this money more than the pension holders and taxpayers..is astounding.”

Read More

Read More
Joe Rogan may be wrong on Covid but his voice and others should not silenced - M...

Mr Hollinrake said this incident bolstered the APPG’s case for an independent regulator for the sector " rather than supervision by the ICAEW and other membership bodies".

An ICAEW spokesperson said: “As the largest insolvency regulator in the UK, we agree that reform is long overdue.

"We consider the biggest problem to be the regulatory framework itself, which is currently focused on the regulation of individual insolvency pracitioners and so prevents complaints - and substantial penalties in cases of misconduct – to be brought against firms. ICAEW has long demanded this change and it is an important part of the consultation which the government launched in December.

“This fine money is not a windfall for ICAEW. The Silentnight case was brought by the FRC under the Accountancy Scheme introduced in 2004, rather than under the current insolvency framework. The Accountancy Scheme required all of the accountancy professional bodies to fund all costs incurred by the regulator (now the FRC) in investigating public interest complaints, irrespective of whether complaints were subsequently proved, and financial penalties imposed.

“The Accountancy Scheme was never intended to be a compensation scheme for third parties who may have suffered losses as a result of actions of ICAEW members and member firms, and this would have complicated the rights of third parties to seek redress through the Courts.

“While a substantial penalty was ordered to be paid by KPMG in relation to Silentnight, many other investigations since 2004 have not resulted in disciplinary proceedings against firms. In those cases, ICAEW and the other bodies have borne all of the costs. Even where fines have been imposed, many of the costs orders have not fully reimbursed the bodies for the whole costs of the investigations.

The spokesman added: “As a result of the FRC taking some larger cases (such as Silentnight) out of ICAEW’s own disciplinary scheme, that scheme – put in place to protect the public – ran at a significant annual loss due to the costs of operation exceeding total fines and costs recoveries. ICAEW must also continue to fund investigations of all new complaints brought by the FRC under the Audit Enforcement Procedure, whether or not allegations are proved, and fines imposed with all future fines going to HM Treasury.

“We have explained all of this in correspondence with the lawyers acting for the Silentnight Pension Fund Trustees. We received a request from a legal firm acting on behalf of the Silentnight Pension Fund Trustees in July, which was considered by the ICAEW Board and declined.

“ICAEW is a professional body serving the public interest, as required by the terms of its Royal Charter. Money from FRC fines comes into our reserves where it is used to fund strategic projects which address public interest matters and support the development of the wider profession. In recent years this has included social mobility programmes such as BASE and RISE, our international capacity building programme, and our educational films.”

At the time of the ruling KPMG said the report made “difficult reading” and said it accepted the findings and regretted that professional standards expected of its partners were not met in this case.

“We no longer provide insolvency services and we have improved our broader controls and processes significantly since this work was performed in 2010,” KPMG UK chief executive officer, Jon Holt, said in a statement.

KPMG will reflect on the tribunal’s findings carefully to learn lessons, Mr Holt said at the time.

Support The Yorkshire Post and become a subscriber today.Your subscription will help us to continue to bring quality news to the people of Yorkshire. In return, you'll see fewer ads on site, get free access to our app and receive exclusive members-only offers.

So, please - if you can - pay for our work. Just £5 per month is the starting point. If you think that which we are trying to achieve is worth more, you can pay us what you think we are worth. By doing so, you will be investing in something that is becoming increasingly rare. Independent journalism that cares less about right and left and more about right and wrong. Journalism you can trust.

Thank you

James Mitchinson