UK to probe RSA scandal
“The FRC has decided to investigate the conduct of certain individual members,” the accounting and auditing authority said yesterday.
The probe is “a result of the identification of issues within the claims and accounting functions announced by RSA” at the end of 2013. It did not name the individuals it will investigate.
Philip Smith resigned as RSA’s Irish chief executive officer in November 2013 and two executives were fired after the insurer began investigating how the Dublin-based unit set aside reserves for insurance claims.
Mr Smith won a €1.25m award from an employment appeal tribunal last month after he brought a case saying he was made the “fall guy” for the accounting issues and that he was effectively ousted. RSA has appealed the judgement.
The FCA is not investigating RSA, the London-based insurer said in a separate statement. The company said it will assist with the probe, if asked.
“The FRC’s remit is over members and member firms of accountants, auditors and actuaries,” RSA said.
“We understand that the investigation will, therefore, cover members of these professions who were employed by RSA at the time.”
The share price fell 0.5% to 401.5p in London after the statement was published, valuing the company at about £4.1bn.
Deloitte Touche Tohmatsu audited RSA Ireland’s accounts in 2012. Claire Quinn, a spokeswoman for the firm in Dublin, said the FRC is not investigating Deloitte, or any of its employees involved in the audit.
The Central Bank in Dublin has been carrying out an investigation into RSA Ireland’s claims-reserving practice since November 2013. RSA CEO Stephen Hester said last year he expected the company to get a fine, though it wouldn’t be “headline-making.”
Under laws introduced in 2013, the Central Bank can fine firms as much as €10m, or 10% of revenue for regulatory breaches. It may fine individuals as much as €1m.
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