The Financial Reporting Council (FRC) has ordered UK accountancy firm Mazars and one of its partners to pay almost £2m for failing to give good advice to the trustees of the First Quench pension fund.

The FRC said that Mazars and partner Richard Karmel admitted that their conduct "fell significantly short of the standards" that are expected.

Mazars receieved a "severe reprimand" and was ordered to pay a find of £750,000 and a total of £1.12m in legal costs, while Karmel also received a "severe reprimand" and must pay a fine of £50,000 and £80,000 towards legal costs.

The settlement was approved this year following and relates to advice that Mazars and Karmel gave to the trustees of the scheme in 2007 in respect of a proposed replacement of First Quench Retailing Limited as the sponsoring employer of the fund.

FRC executive director of conduct Paul George said: "This outcome sends a clear message to all accountants and accountancy firms carrying out advisory work that not only do they have a responsibility to carry out their professional work diligently and in accordance with the applicable technical standards but that they must consider the different and opposing commercial interests of all those involved.

"Accountants must not allow undue influence of others to override their professional judgements and they must have a clear understanding of who their client actually is. The result in this case demonstrates our commitment to ensure the standards of the profession are upheld so that it can justifiably secure public confidence."

Mazars said in a statement: "We regret that our conduct fell below our usual high standards in relation to this 2007 advisory assignment. We are pleased that the FRC accepted that the misconduct was neither dishonest nor deliberate, that we took appropriate remedial steps relating to quality assurance, and that it did not cause any actual loss to the beneficiaries of the pension fund."

First published 05.09.2014

monique_simpson@wilmington.co.uk