PricewaterhouseCoopers, one of the world’s top four auditing firms, faces possible sanction after admitting it failed to report that JPMorgan bank was not protecting customer funds properly, Britain’s auditing watchdog said yesterday.

The complaint spans several years and centres on PwC’s reports on how JPMorgan’s securities arm complied with UK Financial Services Authority (FSA) rules requiring customer funds to be kept separately from a bank’s own assets at all times.

The Accountancy and Actuarial Discipline Board said PwC had admitted it did not compile its FSA reports “with due skill, care and diligence and with proper regard for the applicable technical and professional standards expected of it”.