Schroders said in a statement to the market on November 23: “Following a formal tender process led by the audit and risk committee, the board has approved the appointment of Ernst & Young LLP as auditor for the financial year commencing 1 January 2018.”
PwC will stay on as auditor for the 2016 and 2017 financial years, the firm said.
The appointment marks the end of a long-running saga that began in 2013 when the UK’s Competition Commission published a report into the competitiveness of the audit market for large firms.
It criticised firms for keeping the same auditors for multiple decades and said companies must re-tender audit services at least once every 10 years. Corporate governance hawks worry that audit firms can struggle to deliver truly independent advice if they work for the same firm for too long.
The same year, Schroders announced plans to replace PwC with KPMG. But that appointment ran into the sand when KPMG was found to be doing other work for Schroders which would affect its independence; so PwC stayed on.
In March this year Schroders said it would re-tender for its auditor once again.
EY said the appointment was a fillip for its financial services audit practice, led by Omar Ali. He said in a statement this morning: “We are proud of the vital role our profession plays in the functioning of the world’s capital markets … and we are well-positioned to serve companies like Schroders.”
EY said Schroders capped a run of recent wins for the firm, including Royal Dutch Shell, Royal Bank of Scotland, Sainsbury’s, the London Stock Exchange Group and the BBC.
At Schroders’ general shareholder meetings in 2014 and 2015, around 2.9% of the firm’s shareholders voted against PwC’s reappointment, making it one of the most-opposed resolutions on the ballot.
At this year’s AGM, following Schroders’ announcement in March it would be looking for a new auditor, the opposition dropped dramatically to just 0.09%.