UP TO ten former bosses and senior managers who worked at HBOS in the lead-up to its catastrophic collapse could be banned from working in financial services after yesterday’s publication of damning reports into the bank’s demise.
They include former HBOS chief executive Andy Hornby and predecessor James Crosby, ex-chairman Lord Stevenson, former finance director Mike Ellis and Colin Matthew, ex-head of the international division.
The news comes after a scathing independent report by Andrew Green QC criticised former regulator the Financial Services Authority (FSA) for its failure after the bank’s collapse in the 2008 financial crisis to investigate a raft of top bosses.
Only one former HBOS executive, Peter Cummings, who headed the corporate lending division, was banned by the now-disbanded FSA from working in financial services and fined £500,000.
Green said the decision-making process at the FSA was “materially flawed, and the regulator should have conducted an investigation, or series of investigations, wider in scope than merely into the conduct of Mr Cummings and the corporate division”. He said the more restricted investigation was “not reasonable”, even without the benefit of hindsight.
Green’s report added: “The FSA gave no proper consideration to the investigation of any other individuals, including former members of the board (such as the former chief executive Andy Hornby and former chairman Lord Stevenson).”
The Prudential Regulation Authority and the Financial Conduct Authority, the new twin regulators that succeeded the FSA in 2013 and which also produced their joint report into the collapse of HBOS yesterday, confirmed they would now review whether to take any enforcement action against other senior bankers at HBOS. Other senior managers mentioned in the report included Lindsay Mackay, former boss of the Treasury division, and former group risk directors Peter Hickman and Dan Watkins.
However, even if additional bans from financial services are handed down, the statute of limitations means that the PRA and FCA cannot fine any other former HBOS senior management found to be culpable.
Oliver Parry, senior corporate governance adviser at the Institute of Directors, said: “There is justifiable anger that, so far, only one HBOS executive has been reprimanded for his involvement in its failure.
“The regulators have plans for further investigations.”