Monday, 23 November 2009

The Cost of the Dunfermline Building Society Downfall



Dunfermline and West Fife MP Willie Rennie has called for an investigation into administrators reportedly earning £1 million a month from managing the former assets of the Dunfermline Building Society.

The accountancy firm KPMG has sold just a proportion of the assets of the building society and is charging £540.33 an hour for its services.

You will remember the Nationwide Building Society took over ownership of branches, deposits and staff of the building society after the government refused to intervene when the 140 year old society incurred losses of £26 million.

Mr Rennie said: "I raised concerns with the government at the time of the break up about the fees and the role of KPM. However the rate of return to the consultants is astonishing.

"I have written to the chancellor to urge him to undertake an inquiry into the fees paid.

"We also need to know if government ministers approved such fees. Can this really be judged as value for money?"

A spokesman for KPMG denied that there was any "wrong doing" on behalf of the company and described its involvement with the Dunfermline as a "significant" undertaking.

"There is a large on-going administration involved with the Dunfermline Building Society and our main aim is to recover monies for creditors."

Surely the KPMG spokesman omitted "and milk the taxpayers" from his statement? £1 million a month in administration fees does seem excessive for a small building society such as the Dunfermline. I wonder how much we are paying for the administration of our share of the bailout banks? Someone needs to keep an eye on the taxpayer's money invested there or is the FSA doing that and at what cost?

Sadly I don't think Mr Rennie will receive a detailed response from the Chancellor but all credit to him for trying.


16 comments:

banned said...

"our main aim is to recover monies for creditors", liars; their main aim, as always, is to recover big fat fees for themselves.

subrosa said...

Aye, I thought their spokeman left himself wide open with his remarks banned.

Crinkly & Ragged Arsed Philosophers said...

On much the same issue, today's Herald article by Prem Sikka questions the role of these so called financial probity police in relation to the banking meltdown and their contribution to it.

Perhaps its a question of 'Who will guard the guards. Especially when they are incapable of evaluating the 'Trojan Horse' accounting practices they've initiated.

Arthur Andersen were wiped out by the Enron scandle, but it seems KPMG, Ernst & Young, Pricewaterhouse and Deloitte are all too big to get their fingers rapped.

Sort of leaves the FSA looking like a blind invigilator?

Apogee said...

Hi SR
What is needed is a complete and honest replacement of the current system by one which gives to people owed by the business a fair proportion what they are owed.
The last thing needed is to have a flock of vultures decend on the carcase and leave only small bones!
Has any one ever heard of a receiver going into receivership?
"banned" is "on the money" , every time a business goes to the wall, there is the same complaint about fees.And the fallback excuse? But we are just meeting the legal requirements!
Now there's something that really needs addressing.

D.

Crinkly & Ragged Arsed Philosophers said...

Subrosa - I don't want to stick my nose in, but have you any contact with Wardog?

It's possible he has a legitimate complaint to the press council on the grounds of intrusion.

tris said...

I think banned has it in a oner.

It's all about money.

A propos of nothing....I wonder if Alistair has designs on a directorship with KPMG?

Dawdels said...

I'm sure I read somewhere that the OFT are looking into the fee's charged by Insolvency Practitioner's.Long overdue.

subrosa said...

Aren't KPMG and PWC the two government companies of choice Tris? Nice work if you can sook hard enough.

subrosa said...

Hello Dawdels, I do hope so. As you say it's certainly well passed time. Good on Willie Rennie for trying though.

subrosa said...

I hadn't read that article until Crinkly and there's certainly quite a ring of truth about it don't you think.

The FSA is exactly that and has no authority. The downfall of the Dunfermline shows that. If they had been doing their job correctly they should have told the Dunfermline they didn't have enough strength to go into the American market as they did.

subrosa said...

Crinkly, drop me an email. The address is on the right hand side of the front page of the blog but you use @ for at.

subrosa said...

That's the way it's always been Apogee. I'm sure you've heard people in trouble say they had plenty fixed assets, only to find once the liquidator has finished they've nothing.

Maybe Willie Rennie's efforts will pay off, I do hope so. Alistair Darling isn't too interested in such matters I believe, he's too busy hanging onto his job.

Even receiving a brief email response from him seems too much of an effort for his office.

scunnert said...

Vultures!

subrosa said...

Indeed scunnert.

Caron said...

Talk about a licence to print money!

Good post!

subrosa said...

Aye Caron and I hope his efforts to highlight this are rewarded.

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