I’m told the extremely tardy official report into the collapse of HBOS will be published early in the New Year and will contain criticism of the former chairman, Lord Stevenson, and chief executive, Andy Hornby. Whether it also imposes sanctions is another matter.  

January will mark six years since Lloyds completed its takeover of the failed bank, shouldering huge unquantified liabilities, which spelt disaster for its own investors and necessitated a government rescue. More than 40,000 bank employees have lost their jobs since then, with more redundancies to come. Millions of small shareholders have lost most of their investment.

Besides being a major contributor to the UK budget deficit and recession, the HBOS fiasco raised serious questions about the way in which banking was managed and the role of the regulator.


The then regulator, the Financial Services Authority, proposed initially to keep its report on the affair secret, until MPs on the Treasury Select Committee forced it to promise publication. That was five years ago – we are still waiting. The FSA has in the meantime been abolished, to be replaced by the Financial Conduct Authority. In the summer the FCA published terms of reference for the report and suggested it might be ready by the end of the year. I understand it has slipped at least a month.

The HBOS collapse was second only in size to RBS and led to write-offs of £54 billion. In a hard-hitting report 18 months ago, the Parliamentary Commission on Banking Standards called for Stevenson and Hornby to be banned from working in financial services. Since then, silence from the authorities. Stevenson was, for several years, a director of an investment firm and Mike Ellis, the former HBOS finance director, is chairman of the Skipton Building Society. Both had to be approved by the FSA to hold those posts. 

The only person named and shamed for the HBOS wreck was Peter Cummings, former head of corporate banking. Two years ago he was fined £500,000 and banned from the finance industry, but his bosses appeared to get off scot-free. He said at the time ‘the fact that I am the only individual from HBOS to face investigation defies comprehension.’

Compare that to the action taken recently by the FCA against three directors of Swinton insurance. The chief executive, finance and marketing directors have all been banned from working in finance and fined sums between £200,000-400,000 for running an aggressive sales strategy which boosted the firm’s profits at the expense of its customers. 

It is worth reading the words of Tracey McDermott, director of enforcement and financial crime at the FCA. She said: ‘A culture was allowed to develop within Swinton that pushed for high sales and increased profit without regard to the impact on the firm’s customers. We expect firms to put customers at the heart of their business. These three directors should have recognised the risk to customers and redressed the balance so that the drive to maximise profits did not jeopardise the fair treatment of customers.

‘Those with significant influence within firms are responsible for setting the tone and the culture; they set the example that others will follow. Today’s enforcement action should serve as a timely reminder to those at the very top of firms that the FCA is determined to hold individuals to account where they fall short of the standard we require.’

Take out the word ‘Swinton’ and substitute ‘HBOS’ there and see if you feel the quote is still relevant – and remember Swinton had to pay out millions of pounds to victims of miss-selling. Lloyds has so far set aside £11 billion in compensation for PPI mis-selling claims, most of which came from HBOS.

Stevenson and Hornby should brace themselves for more unwelcome publicity, but whether their bank balances also suffer is by no means certain. At the time of the Cummings decision the FSA declared that enforcement proceedings were at an end. That sounded very much like a “Get out of Jail Free” card.