EY targets UK consultant cuts as fees dry up
Auditor suggests UK cuts are part of routine business review
EY has put about 100 jobs in its financial consulting unit at risk of redundancy after a decline in work and a drop-off in fees made from regulatory advice.
The Big Four accounting firm, which last week revealed revenues generated by its advisory business had shrunk 3 per cent in 2019, initially earmarked 350 roles that could be axed, according to one person close to the company.
The staff affected work at EY’s office in London’s Canary Wharf and the departures will include a small number of salaried partners, the person said.
EY’s UK revenues grew 1.5 per cent to £2.45 billion (€2.86 billion) in 2019, its slowest rate in several years, although profits increased by £5 million to £477 million. The average pay received by EY’s partners dropped from £693,000 to £679,000 after the number of partners rose from 681 to 702.
One person close to the company blamed the redundancies in part on a lack of business from Lloyds Banking Group. EY has previously provided a number of advisory services to the UK bank, including reviewing its environmental, social and governance annual investor report.
In 2012 EY’s Big Four rival PwC claimed in a submission to the Competition Commission that EY was targeting a takeover of its audit of Lloyds. PwC’s 153-year role as Lloyds’ auditor ended last year when it was replaced by Deloitte.
EY denied the redundancies were linked to any single client.
“We routinely review our business and staffing structures to ensure they can best meet client demand and market conditions,” it said. “The proposed redundancies are not linked to any one client - it is in response to the change in the mix of our business.”
It is the latest cost-cutting measure being implemented by a Big Four accountant as the grouping faces a major overhaul in the UK. The government is considering recommendations from the competition watchdog to force a separation of audit and consulting businesses.
KPMG has launched Project Zebra to save £100 million in costs through restricting the use of staff mobile phones, axing a third of its personal assistants and selling the lease of its Mayfair members’ club, Number Twenty.
EY has been investing heavily in its UK audit practice by about £25 million a year and has sought to gain more banking clients. It won its first major banking audit for the Royal Bank of Scotland in 2014. – Copyright The Financial Times Limited 2019