Accountancy Newsletter June 2015
DAC Beachcroft's Accountancy newsletter features topical news and insights for our clients and contacts.
Published 29 June 2015
Barclays was one of the banks which in 2012 set up compensation schemes for victims of mis-sold interest rate hedging products. The arrangements are overseen by the FCA and the Barclays scheme has been administered by KPMG as an independent reviewer.
There has been considerable press discussion and parliamentary debate as to whether the compensation provided, particularly in relation to consequential losses, has been fair.
On 24 April the High Court heard an application for judicial review of the Barclays scheme by one disgruntled customer – Holmcroft Properties Ltd. The judge decided that the fact that KPMG was acting to ensure that the redress agreement provided fair and reasonable compensation was one of the factors which gave the arrangements a sufficient public law aspect to justify a judicial review.
This was only a preliminary hearing as to whether a judicial review should be allowed to get off the ground at all and it will be some time before the outcome is known. Nevertheless, the fact that the door to the judicial review process has even been pushed ajar means that the floodgates could open for other businesses unhappy with compensation payouts from the banks over interest rate mis-selling.
Of particular interest to accountants is the fact that KPMG has been found to be "amenable to judicial review". This is possibly not something that it would have envisaged when accepting the appointment as independent reviewer and is an example of how the concept of "the public interest" is now relevant to roles performed by accountants in high-profile engagements. However, there remains considerable uncertainty for the profession over how relevant the concept is, and when. As the FRC reported when publishing the Appeal Tribunal's January 2015 Decision in the FRC proceedings involving Deloitte and MG Rover: "The Appeal Tribunal comprehensively reviewed the need for accountants to act in the public interest and agreed that accountants should take this into consideration in deciding whether to accept or continue an engagement. However it felt there was a lack of clarity in the ICAEW’s guidance for accountants on how they should do that. The FRC will continue to work with the profession to address this issue". It is very much a case of "watch this space" and, for the accountants, they must do their best in the absence of clear guidance on what is expected of them when undertaking high profile engagements