Am I just too cynical? The Independent confirms what I have been told, that the Financial Services Authority’s report into its own policing of HBOS before the crash will not appear before next summer. By then it will be five years and more after some of the crucial events and too late. The FSA will be gone and the whole thing can be conveniently brushed under the carpet, with platitudes such as “lessons learned” and “time to move on.”
If the FSA’s report into its handling of Royal Bank of Scotland is any guide, the HBOS report will contain a lot of self-flagellation, but name no names. It will also fail to identify the internal failings which allowed the bank to make the disastrous decisions which destroyed its capital, wiped out its shareholders and would have extinguished the savings of its depositors had not the taxpayer and Lloyds Bank come to the rescue.
So far the only person named is Peter Cummings, who headed the HBOS corporate banking department. He has been fined £500,000 and banned from working in financial services for life. But the FSA’s own preliminary report into Cummings’ department, published in March, showed that the failings were widespread throughout the bank.
HBOS had an elaborate risk assessment structure with three (alleged) lines of defence, finishing up with the board. The FSA, in a very detailed report, showed how one by one each defensive line either failed or was easily circumnavigated. Cummings was responsible for part of this sham-structure, but not the whole thing.
Yet, my sources tell me that the FSA has had only cursory meetings with former chief executive Andy Hornby, finance director Mike Ellis, chairman Lord Stevenson and audit committee chair Tony Hobson. Their part in the bank’s collapse has not been examined. All have gone on to other high profile corporate positions. Ellis has even been allowed to become chairman of the Skipton Building Society.
The FSA would have kept its report secret had the Commons Treasury Select Committee not shamed them into promising to publish it. We need the MPs to flex their muscles again and demand a more thorough examination of what went wrong. The issue is too important to be allowed to be quietly forgotten. Taxpayers will be paying for the mistakes of the HBOS board for years to come.
Failure to learn the lessons of the past means that we will be doomed to repeat them at some time in the future.