FCA to investigate Tesco profits shortfall

UK: More problems for the supermarkets with news that the FCA is to investigate Tesco’s profits shortfall.

The Financial Conduct Authority (FCA) has today announced a full investigation into Tesco’s £250m overstatement of expected half-year profit.

The matter is currently the subject of an independent review by Deloitte but, in a statement today, Tesco said it would continue to co-operate fully with the FCA and other relevant authorities considering this matter.

The discrepancy was first flagged by Tesco last week during its final preparations for its interim results. in identifying the overstatement of its expected profit for the half year, Tesco blamed “accelerated recognition of commercial income and delayed accrual of costs”.

At the time, Tesco Group ceo Dave Lewis said “We have uncovered a serious issue and have responded accordingly.  The Chairman and I have acted quickly to establish a comprehensive independent investigation.  The Board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.”

Coyle charged

Meanwhile, in a separate incident, the Financial Conduct Authority has charged Paul Coyle, the former treasurer and head of tax at Wm Morrison Supermarket with two offences of insider dealing, contrary to Section 52(1) of the Criminal Justice Act 1993. The offences relate to trading in Ocado Group plc shares between February and May 2013.