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PwC near halves £100m Beaufort bill following client fury

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PwC near halves £100m Beaufort bill following client fury

PwC has near-halved its estimated charges for liquidating failed wealth firm Beaufort Securities from £100 million to £55 million

Russell Downs, a joint administrator and partner at PwC, told the Financial Times, ‘We have a planning horizon of two years instead of four, and we’ve refined our costs down to £55 million.’

Downs later explained in a statement that the costs include 35 retained Beaufort staff, office space and related expenditure, IT infrastructure, administrative and legal support, general contigency, and VAT.

The statement added, 'The timescale and associated costs have reduced due to the streamlined process afforded by our proposed distribution plan to clients in September.

'This is compared to our previous maximum forecast -  which we emphasised was only a reserve estimate based on a four-year process and subject to review.

'The creditors’ committee support the development of the distribution plan, with the aim of receiving all necessary approvals in July with the intended block transfer of as many clients as possible to a nominated broker in September.' 

Tension over costs

The move to slash costs follows intense criticism of PwC’s initial forecast of £100 million for the liquidation of the company's assets.

Beaufort’s clients reportedly expressed fury about the bill at a meeting of up to 300 people with the accountancy firm earlier this month.

That came shortly after investor group ShareSoc launched a campaign taking aim at its cost and time estimates, saying they had 'no justification.'

Playing down the idea they were reacting to the criticism, Downs told the FT: ‘We came up with £100 million right at the outset and made sufficient progress to make a refined estimate. That supersedes the figure of £100 million.

'We tried to make clear at the outset that we made a conservative set of assumptions and that we would revise that, and we’ve done that.'

Downs also said many clients had confirmed their balances with Beaufort.

Beaufort Securities filed for bankruptcy on 2 March. The US Department of Justice shortly after indicted the firm for fraud and money laundering.

PwC previously said that the liquidation of the firm has been complicated by legacy tech 'issues.'

‘Prior to the administrations, the companies had switched over to a new trading and client management platform, which went live in October 2017,' PwC said in a statement.

The company said this impacted the reliability of data held by Beaufort relating to 40 stock lines.

In addition, the business was still working to reconcile an apparent difference of 150 individual stock lines held by external custodians and those recorded on Beaufort’s internal documents.

 

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