Sir Brian Pomeroy, Senior Independent Director at the Financial Conduct Authority and Chairman of the HBOS Review Steering Committee said: “The review into HBOS has involved a dedicated team sourcing and considering a huge amount of material including reviewing around a quarter of a million documents and interviews with 80 key individuals”.
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British regulators will consider banning former executives and board members at HBOS, following the publication on November 19 of two long-awaited reports into the collapse of the United Kingdom mortgage lender in 2008.
Andrew Green QC said regulators should “do what their predecessor, the Financial Services Authority failed to do” and examine the case for investigating those who led the bank to its failure.
“The PRA and FCA will conclude a review as to whether further enforcement action as early as possible next year”, they said.
It agreed to a rescue takeover by Lloyds TSB in 2008, but the taxpayer bailed out the enlarged bank shortly after to the tune of £20bn.
“The scope of the FSA’s enforcement investigations in relation to the failure of HBOS was not reasonable”, Mr Green wrote.
It also criticised the Financial Services Authority (FSA), which has now been replaced by the FCA and the Prudential Regulation Authority (PRA). The findings include that the board “lacked sufficient experience and knowledge of banking”.
The report also said former finance director Mike Ellis, former head of the bank’s global division Colin Matthew and former chief of the bank’s treasury department Lindsay Mackay should be investigated.
Stevenson is a non-executive director of book retailer Waterstones, while Hornby is chief executive bookmakers Coral and chairman of the on-line pharmacy retailer Pharmacy2U.
So far Mr Cummings – who ran the commercial arm at HBOS – is the only former director at the bank to have been penalised by the FSA, after being fined £500,000 and banned for life from working in the City.
Regulators said they had “failed to set an appropriate strategy, and also failed to challenge a flawed business model”, and accused them of presiding over a bank that was “excessively vulnerable to an economic downturn and a dislocation in wholesale funding markets”. “The blame for this cock-up lies – not for the first time – with the regulators”.
Crosby, Hornby and Stevenson were not fined but faced accusations from lawmakers that they failed to manage the bank properly. “This has gone on long enough, to put it mildly”.
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Thursday’s reports criticise the FSA’s supervisory approach for not recognising the risks HBOS was running. The regulator has also been handed greater powers, including the ability to take criminal action over benchmark manipulation. The bank is set to complete its return to private ownership from state control early next year.
