Tyrie: Hbos report must include review of FSA ‘conduct’
The Treasury Select Committee has told the Financial Services Authority that it will appointing special advisers to oversee the regulator’s report into the failure of banking group Hbos, similar to the work previously undertaken on the Royal Bank of Scotland.
In a letter to FSA chairman Lord Adair Turner, Andrew Tyrie, chairman of the TSC, warned that the committee will require the FSA to conduct a “comprehensive assessment” of the reasons for Hbos’ failure and also of the FSA’s conduct in relation to the bank.
The TSC heavily criticised the regulator over its publication in 2010 of a one-page summary of the causes behind the collapse of RBS. Eventually, the FSA published a full 452-page report in December 2011 under the independent oversight of Bill Knight and Sir David Walker in their capacity as specialist advisers to the committee.
Although Mr Tyrie did not name who the special advisers will be in overseeing the FSA’s Hbos report, he made it clear that the advisers will oversee the the drafting process and provide assurance that the report is a fair and balanced reflection of the evidence.
This follows on from yesterday’s news that the FSA will publish a full report into the failure of Hbos during the financial crisis in 2008 and will aim to conclude this work before its bifurcation early next year, which will see its work split between the Financial Conduct Authority and the Prudential Regulation Authority.
The FSA said it had previously intimated that it would produce a report into the failure of Hbos in 2008, which saw the government step in and disregard competition rules to facilitate a rescue merger with Lloyds to form Lloyds Banking Group.
It added that work on the report could not commence until it had concluded its enforcement proceedings in relation to the bank’s failure, which saw it issue a £500,000 fine and a lifetime ban to Hbos executive Peter Cummings, former chief executive of Hbos’ corporate division.
Mr Tyrie highlighted that the watchdog’s previous report into RBS’s failure gave the public an explanation for the bank’s collapse and the taxpayers’ bailout but it also exposed some of the shortcomings of the FSA.
He said: “Lord Turner undertook to produce a similar report on Hbos once the FSA’s enforcement action had ended. I welcome the fact that the FSA has now confirmed this will happen.
“Work on the report should begin immediately. It must be comprehensive, covering the reasons for, and consequences of, both the Lloyds/Hbos merger and the earlier Bank of Scotland/Halifax merger.
“As with the RBS report, the Treasury Committee intends to appoint specialist advisers to oversee the drafting process and provide assurance that the final text is a fair and balanced reflection of the evidence.
“The public deserves to know exactly what happened at Hbos. The Treasury Committee will ensure that this happens.”