The Financial Times reports that the Parliamentary Commission on Banking Standards has started an inquiry into the 2008 collapse of HBOS. It will call former executives as witnesses and plans for the first time to use legal counsel to cross-examine them.
The commission, drawn from MPs and Peers, was set up after the LIBOR fixing scandal to looking at standards and culture in banking, but also has in its remit to find lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy
That is the good news. Not so good is that the HBOS inquiry will be led by Lord Turnbull, former cabinet secretary. It was he who coined the now infamous phrase “economical with the truth” in his evidence to the Spycatcher trial in 1986. I am all for economy, but not with the facts.
So far the Commission has said it will hear testimony from three former HBOS executives: Paul Moore, who was fired from his risk management job in 2004 after warning that HBOS was taking excessive risks, Colin Matthew, former chief executive of the international businesses and Jo Dawson who held a variety of roles in risk and retail.
That is very much a second division list. The Commission should compel those who actually ran the bank to give evidence: Lord Stevenson, the chair, Andy Hornby and James Crosby, former CEOs and Mike Ellis, the finance director.
I can’t see how they are going to identify the governance failings without questioning those at the top of the heap as well as those lower down.
“We want to find out not just what went wrong and how it was allowed to happen but also what warnings were or were not given and what warnings were ignored,” Turnball told the FT. Amen to that, but unless the Commission starts to flex its muscles its report will not take us much further.