[2025] UKUT 00185 (TCC)

The papers for the Audit Committee meeting also included a “Q3 Update on accounting, reporting and control matters” authored by Ms Petterson. The opening paragraph said:

“The purpose of this paper is to provide an update on accounting, reporting and control matters that will impact on Metro Bank’s 2018 year end reporting process, and to summarise other significant matters that we would like to bring to the Committee’s attention.

Within the paper, we cover the following items:

- Update on new accounting standards…

- Update on control matters: update on supplier payment practices, implementation of core asset finance system, and reporting of Risk Weighted Assets.

- Update on future accounting considerations:…”.

We note that our Q3 Trading Update has been prepared on a consistent basis to previous quarterly trading updates and there are no significant accounting or reporting matters to bring to the Committee’s attention.”

Under the heading “update on control matters” was the following passage:

“Reporting on Risk Weighted Assets:

- Following discussions at the September Audit Committee and Board meetings, we have commenced a piece of work to review our calculation of Risk Weighted Asset reporting to the regulator.

- The work, supported by Deloitte, will review our Policies and Rule Interpretation, Data Quality, and Processes and Controls, and will create a remediation plan to resolve both short and long term issues. We expect this plan to impact across different areas of the bank.

- We expect to complete this work by year end, and we will update the Committee on any corrections which will be reported to the regulator and any revisions required to our reporting methodologies.”

The passage therefore did not give a figure for the estimated quantum of the RWA errors. The minutes record as follows (our emphasis):

“Following discussions at the September Audit Committee and Board meetings, the team had commenced the work to review the calculation of Risk Weighted Asset reporting to the regulator.

The work, supported by Deloitte, would cover policies and rule Interpretation, data quality, and processes and controls. A remediation plan to resolve both short and long term issues would be implemented. It was expected that the work would be complete by year end, the Committee would be updated on any corrections required to be reported to the regulator and any revisions required to reporting methodologies. AG reported that a separate piece of work was being carried out by the Risk function to ensure that the systems and controls for regulatory reporting were fit for purpose. The impact of incorrect reporting on the balance sheet was not insignificant and the Committee reminded Management of the importance of ensuring that this was remediated fully.”

Ms Gillan was asked in cross-examination about the reference to “any corrections required” and agreed that she had understood that corrections of the order of £570m were likely to be required to commercial mortgages, based on the best estimates at the time. She also confirmed that the reference to the “separate piece of work” was to that being carried out by her team and finance to support Deloitte, see §157.