KPMG settles lawsuit over Quindell audit negligence claim

KPMG has paid £5m to settle a lawsuit over audit failings at UK insurance software group Quindell – the latest in a backlog of legal and regulatory cases at the Big Four law firm.

Quindell – which is now called Watchstone – issued the High Court claim against KPMG in November 2021.

It argued it suffered losses because of problems in the audit of its 2013 financial statements, which were restated in 2015.

Watchstone alleged KPMG was negligent and breached its duties, claiming damages of £13.7mn-plus interest from the firm for dividends paid out and fees incurred as a result of problems with the audit.

The case was not expected to reach trial until 2024.

Under the settlement announced by Watchstone on Monday, KPMG will pay £4.95m, without admitting liability.

The payout is equivalent to seven times the £688,000 average profit share of KPMG’s UK partners in the year to September 2021, the most recent for which it has filed accounts.

KPMG declined to comment other than to confirm it had reached a settlement.

A KPMG UK spokesperson said: “We can confirm we have reached a settlement with Watchstone Group PLC.”

The settlement takes the total payouts made by KPMG over its work at Quindell to more than £8m.

The audit firm and one of its partners were reprimanded and fined £4.5m by the Financial Reporting Council in 2018 – but the penalty was discounted to £3.2m because the auditor agreed to settle.

KPMG has now paid more than £20m in regulatory fines since April last year.