EY Repays £15 Million to Santander UK Amid Dispute and Ends Contract

EY, the financial crime consultants for Santander UK, have reimbursed £15 million to the bank and no longer have an ongoing working relationship with the lender. This development stems from a disagreement between the banking giant and the Big Four firm, potentially leading to job cuts within EY's UK financial crime division.

EY was initially engaged to collaborate on Santander's "Project Morgan." However, a dispute arose regarding the quality of assistance provided, resulting in a substantial refund and the termination of their contract.

The conflict primarily revolved around the quality of EY's work, which Santander alleged was subpar. This led to EY refunding approximately £15 million earlier this year. Additionally, this disagreement has raised the possibility of downsizing EY's UK financial crime advisory team, which currently consists of 150 members.

"Project Morgan" reportedly experienced significant issues over an extended period, and the financial settlement has impacted EY's UK financial services division's results for the most recent fiscal year, ending in June.

It remains unclear whether Santander has brought this work in-house or entrusted it to another firm. The refunded amount, £15 million, is roughly equivalent to the annual pay of approximately 19 of EY's UK partners, averaging £803,000.

EY, as one of the Big Four consulting firms, was among the external advisers hired by Santander, a major Spanish bank, to enhance its anti-money laundering (AML) and financial crime processes, which had faced regulatory scrutiny. In December of the previous year, the Financial Conduct Authority (FCA) imposed a £108 million fine on the bank, one of its largest penalties related to AML processes, covering failings from 2012 to 2017. Santander disclosed that it had invested over £700 million in the past five years to overhaul its financial crime systems.

Santander emphasized the need to keep up with technological advancements, pilot new platforms and processes, and comply with best practices while continuing to innovate.

Meanwhile, for EY's financial crime advisors in the UK, this episode has raised concerns about potential layoffs within the team. Nevertheless, a source connected to EY's management asserted that the decision to place staff in the division at risk of redundancy, pending consultation, was driven by broader market dynamics.

Despite the dispute, EY continues to collaborate with Santander on various other matters worldwide. EY has opted not to provide comments on this matter.

By fLEXI tEAM