Pension Pushing: Lane Clark & Peacock snap up KPMG Pension division

September 10, 2019

2 min read

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What's going on here?

Lane Clark & Peacock (LCP), one of the UK’s largest financial consultancy firms, is looking to bid £200m in a takeover of Big Four auditor KMPG’s pensions advisory division.

What does this mean?

KPMG placed its pensionary advisory unit up for sale in June 2019. LCP were one of a select number of firms that got through to the next stage of the bid for the KPMG unit.

If the bid is successful it will see a substantial shrink in the size of KPMG, whilst LCP is likely to gain an extremely valuable extension. The KPMG division offer actuarial and investment advice to 1/3 of the FTSE-100, fitting extremely well into the business nature of consultancy firm LCP. This means if all goes to plan, LCP could see a fast expansion.

What's the big picture effect?

If the sale of the KPMG division is concluded, it will be amongst the largest corporate disposals by a major UK audit firm and forecast a complete reshake of the audit and consultancy markets as we know them. 

The decision to sell this arm followed the subjection to many penalties; namely KPMG have faced hefty fines for failing audits of companies such as Ted Baker and the Co-operative. They have also been subject to further criticism over their involvement with the audit of Carillon as it racks up £5bn in debt.

In addition, the Big Four have seen increasing pressure from outside sources. Following Deloitte’s Serco scandal, competition watchdogs recommended greater separation between audit and consulting businesses within the Big Four firms. They have also pushed for a reformed regulatory body; The Audit, Regulatory and Governance Authority. This highlights the complexities faced by firms like the Big Four and shows a change in the market and a growing divide between the work of audit firms and consultancy firms.

To conclude, it is likely that the separation of KPMG from one of its largest divisions is just the first of many. This seems to suggest commercial solicitors are in for an increased workload as upcoming reforms look inevitable for the financial industry.

Report written by Callum Tanton-Parham

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