Lloyds Banking Group should have appointed HBOS’s Tony Hobson to its audit committee, when it rescued the failing lender back in 2008. His name suggests he would have perfectly understood the choice Lloyds has just faced, in appointing a new firm to check its accounts.
After 153 years of paying PwC to do the job, Lloyds has been forced to pick a new external scrutineer, under EU rules requiring the “mandatory rotation” of auditors. But Thursday’s news that Deloitte has been selected indicates that, while the decision was Simon Henry’s as audit committee chair, it was very much the proverbial Hobson’s Choice.
Due to potential conflicts of interest, and a lack of big competitors, Deloitte was the only viable option of the firms that tendered. And this absence of genuine competition will continue to be a problem for FTSE 100 companies — and their shareholders — until radical audit reform is delivered.
Lloyds did not comment on the firms it considered, but people familiar with the process say there were five. That suggests, in addition to Deloitte, two were the other members of the so-called Big Four — KPMG and EY — as well as two smaller challengers.
However, as reported…
