Report into collapse of HBOS slates regulator

A stinging report into the collapse of Halifax Bank of Scotland (HBOS) recommended that former senior executives at the bank should be barred from working again in financial services and severely rebuked the regulator for failing to prevent its collapse.

A UK parliamentary commission on banking standards found that the, “HBOS story is one of catastrophic failures of management, governance and regulatory oversight”.

HBOS had to be taken over by Lloyd’s in 2008 with an injection from the taxpayer to stave off a collapse.

The Parliamentary Commission pinned much of the blame on former chairman Lord Stevenson and former chiefs executive James Crosby and Andy Hornby.

“It is unsatisfactory that the FSA appears to have taken no steps to establish whether the former leaders of HBOS are fit and proper persons to hold the Approved Persons status elsewhere in the UK financial sector. The commission has therefore asked the regulator to consider whether these individuals should be barred from undertaking any future role in the sector.”

Mr Crosby resigned as an adviser to the private equity firm, Bridgepoint, following the release of the report yesterday.

The commission had also very harsh words for the regulator — the Financial Services Authority (FSA). “The regulators also have a lot of explaining to do when it comes to their role earlier in the HBOS debacle. From 2004 up until the latter part of 2007, the FSA was ‘not so much the dog that didn’t bark as the dog barking up the wrong tree’.”

Overall the commission found that this is a story of a bank, “brought down by ill-judged lending, poor risk control and inadequate liquidity. Its strategy was flawed from the start”.

The proposed Oireachtas inquiry into the collapse of the Irish banking system is scheduled to begin in early 2014. However, under existing legislation, it is not possible for an Oireachtas committee to make any findings against individuals.