The government-owned British Business Bank has appealed to PwC to examine cases of possible fraud in its business loan program, which was launched to help businesses affected by the Covid-19 pandemic. The news sees PwC winning more contracts with the bank, having already been hired alongside its Big Four competitors KPMG and Deloitte to ramp up government-backed loans to struggling businesses in the summer of 2020.
Even after years of solid growth in new areas, financial services and public sector projects continue to account for the lion’s share of the UK consulting industry’s workload. So it was no surprise that in mid-2020, the taxpayer-owned British Business Bank (BBB) paid £ 20million in advisory fees as it struggled to speed up government-backed loans to troubled businesses. Three of the Big Four – PwC, Deloitte and KPMG – have won contracts to support the BBB for this purpose. The trio will help run emergency lending programs which, by June, provided £ 27bn to 650,000 businesses.
The BBB is a public economic development bank created by the British government. Its objective is to increase the supply of credit to small and medium-sized enterprises (SMEs) as well as to provide business advisory services. It is structured in the form of a public limited company and belongs to the Business, Energy and Industrial Strategy Department.
The institution spent a total of £ 13million on advisers to help set up and manage its Future Fund, while the consultants earned an additional £ 7million for their work on the loan programs. For example, PwC has received £ 5.7million for work on the Future Fund, a separate program that will match up to £ 250million in taxpayer money with private investments in start-ups. In just four weeks, the company developed an online transaction process to issue convertible loan notes to companies that obtain financing.
Now PwC has been recruited for further assistance, this time to help the BBB investigate possible cases of fraud. As UK newspaper The Telegraph reported, UK banks have lent around £ 68 billion through three loan programs, with repayments guaranteed by the government. In December, the government extended the initiatives until March 2021, as Covid-19 cases rose sharply, resulting in further restrictions on socialization and business activities.
The BBB has hired consultants to determine where borrowers are committing or attempting to defraud. Lawmakers have already raised concerns about the risk of fraud, and one estimate found that defaults and fraud in the Bounce Back program for small businesses could reach 80% in a worst-case scenario.