Imminent HBOS report to question FSA investigation after collapse

A long-awaited investigation into the collapse of HBOS in 2008, which is due to be published next week, is expected to question the regulator’s decision to only investigate one executive over the affair.

The conduct of James Crosby, the bank’s chief executive during its period of rapid growth, and Lord Stevenson, its former chairman are set to be slammed by the 500-page investigation into the collapse of the bank after its takeover by Lloyds Banking Group at the height of the financial crisis.

The group was later bailed out with £20 billion of taxpayers’ money.

Mr Crosby was formally stripped of his knighthood two years ago at his own request after a scathing Westminster report into the downfall of the Edinburgh-based bank.

The Parliamentary Commission on Banking Standards claimed that he had been the “architect of the strategy that set the course for disaster”.

The Parliamentary Commission also called for former HBOS chief executive Andy Hornby, Lord Stevenson and Crosby to face bans from the sector.

However, the FT reports that a chapter authored by Andrew Green QC will specifically investigate decision making within the FSA – the predecessor of the FCA – and look at whether more of the bank’s executive team should have faced censure.

HBOS head of corporate lending Peter Cummings was the only staff member to face disciplinary action after the regulator found he led an overly aggressive expansion strategy.

Cummings was fined £500,000 in 2012, and banned from working in financial services.

Originally due to have been published in 2013, and then expected in December, the report was delayed until after the election to allow for “Maxwellisation”, a process through which those criticised in reports are allowed to respond prior to publication.

Responding to its imminent arrival, Treasury committee chairman Andrew Tyrie said: “There is now a reasonable prospect that the public will at least have an opportunity for a full explanation of this catastrophic failure. They deserve it – £20.5bn of taxpayer’s money was required to bail HBOS out.”

Andrew Tyrie, the chairman of the powerful Commons Treasury Committee, said that the report’s publication was “not before time”.

“There is now a reasonable prospect that the public will at least have an opportunity for a full explanation of this catastrophic failure,” he said.

“They deserve it – £20.5 billion of taxpayers’ money was required to bail HBOS out.”

The document will be published alongside an inquiry into regulator’s action following HBOS’s failure.

Only one former executive has been sanctioned by the FCA (Financial Conduct Authority), which will publish the investigation alongside the Prudential Regulation Authority (PRA).