Partner Nicola McKinney comments on the FRC investigation into Deloitte and Azets, in Law360

Partner Nicola McKinney comments on the UK accountancy regulator’s investigation into Deloitte and Azets over their audits into Stenn UK, following the collapse of the fintech over an alleged fraud.

Nicola’s comments were published in Law360, 11 July 2025.

“Following the collapse of the UK fintech late last year, the FRC’s decision to launch this investigation reflects the scale of the alleged fraud at Stenn UK.

“Both the fact that Stenn’s previous auditor EY resigned, after apparently identifying shortcomings in explanations provided by Stenn’s management, and the nature of the alleged wrongdoing itself will likely have contributed to the regulator’s decision.

“The apparent fraud within the company was first highlighted by court proceedings initiated by one of its investors, HSBC, as a result of its own investigations. The alleged fraud included numerous payments which were purportedly made by well-regarded ‘blue chip’ companies which were – on examination of the company’s accounts – made by similarly named companies which had no relationship with the ‘blue-chip’ companies themselves.

“The FRC investigation will no doubt query whether the auditors ought to have discovered this kind of dissimulation, particularly if it was carried out systemically and was discoverable by HSBC, and whether the auditors for example sufficiently exercised professional skepticism with particular regard to the risk of fraud.

“The FRC has the power to impose penalties, such as hefty financial sanctions, reprimands, and orders to take action within the audit company to prevent recurrences.”