KPMG’s BNY Mellon audit fine from watchdog cut to £3.5 million

Auditor KPMG was clobbered with a £3.5 million fine over its monitoring of custodian bank BNY Mellon on Thursday, but dodged an even bigger penalty from the industry watchdog.

The Financial Reporting Council had called in May for the Carillion auditor to be hit with a record £12.5 million penalty.

But an independent tribunal fined the “Big Four” firm £5 million, which was cut by 30% for co-operation.

The auditor last year admitted falling “significantly short” of standards in its handling of BNY Mellon under so-called Client Asset Sourcebook regulations.

It is understood KPMG failed to tell the Financial Conduct Authority that the bank had not kept separate asset records for its group and its London branch as required under the rules, which changed in 2011.

Partner Richard Hinton, who also admitted misconduct, was fined £75,000, cut to £52,500 for co-operation.