EY to downsize financial services consulting practice
EY has become the latest member of the Big Four to announce restructuring plans for its UK wing, with the news it will be scaling down its financial services practice. The firm is understood to be putting around 100 jobs in the unit at risk of redundancy, having suffered a decline in work amid a mixed set of 2019 results for the company as a whole.
Earlier in Autumn 2019, The Financial Times reported that KPMG was set to axe as much as a tenth of its UK Partners by Christmas. The cull was said to have resulted from KPMG’s annual performance sliding year-on-year. KPMG UK made profits of £356 million in 2018, well below those of five years ago, when it made £414 million. Partners received £550,000 pay-outs, also constituting a fall of almost 10% on last year’s figures, which in turn represented a decline.
Now, EY looks set to follow the lead of its Big Four rival. In November it was announced EY’s UK Partners were set to take a pay cut in 2019, after the audit firm announced anaemic revenue growth of 1.5%. While UK Chairman Steve Varley claimed the results reflected a focus on investing in the firm’s audit quality and its technology and infrastructure, the negative press the Big Four is facing over a series of accounting scandals – many of which resulted in clients entering administration – may well have impacted EY. The firm is currently facing an investigation from the Financial Reporting Council over the collapse of Thomas Cook.
As EY looks to boost profitability in the coming year, The Financial Times has claimed that it will downsize its financial services consulting practice. As revenues generated by its advisory business had shrunk 3% in 2019, EY initially earmarked 350 roles that could be axed, a source close to the company said. However, the number of redundancies will likely be closer to 100, with the staff affected working at EY’s office in London’s Canary Wharf. The departures will include a small number of salaried partners.
According to The Financial Times, another person close to the company blamed the redundancies in part on a lack of business from Lloyds Banking Group. EY previously provided a number of advisory services to the UK bank, including reviewing its environmental, social and governance annual investor report; however, this relationship seems to have deteriorated after rival PwC claimed in a 2012 submission to the Competition Commission that EY was targeting a takeover of its 153-year role as Lloyds’ auditor.
EY denied the redundancies were linked to any single client. A statement to the press read, “We routinely review our business and staffing structures to ensure they can best meet client demand and market conditions. The proposed redundancies are not linked to any one client – it is in response to the change in the mix of our business.”