Last updated: July 11, 2014 6:39 pm

UK regulators pledge to publish HBOS review

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Lloyds Bank©Bloomberg

Lloyds Bank

The role of former top directors of HBOS in the bank’s failure is set to come under fresh scrutiny as regulators pledged to publish a long-delayed review into the mortgage lender by the end of the year.

The Prudential Regulation Authority and Financial Conduct Authority on Friday said that Andrew Green QC, a senior barrister, has been asked to look at whether prohibition proceedings should be brought against any former bosses of HBOS as part of the review.

The review will also look at why the now-defunct Financial Services Authority decided to take enforcement actions against only one senior HBOS banker after the disaster. Peter Cummings, the former head of HBOS corporate, was the sole banker to be penalised by the FSA.

HBOS had to be rescued during the financial crisis in 2008 with a government-brokered takeover by Lloyds, which later needed a taxpayer bailout of £20bn.

MPs have been pushing for publication of a long-awaited report into the affair, and last year the Treasury select committee appointed specialist advisers to scrutinise the review’s independence.

The PRA and FCA said on Friday they were now starting the process of so-called Maxwellisation – named after an investigation into Robert Maxwell’s business empire – whereby individuals are given the opportunity to respond to findings against them.

The section of the review looking at the FSA’s enforcement investigations will be led separately by Mr Green, they said.

His work could put individuals including Andy Hornby and James Crosby, two former chief executives of HBOS, as well as Lord Stevenson, a former chairman, back into the spotlight. Mr Crosby also served as deputy chairman of the FSA between 2007 and 2009.

They were named in a Parliamentary report published last year which asked whether they should be “prohibited from holding a position at any regulated entity in the financial sector.”

Andrew Tyrie MP, the chair of the Treasury select committee, said there had been a risk before the reports into the failures of HBOS and its rival Royal Bank of Scotland that the UK was into “whitewash territory”.

The decision to put an assessment of the FSA’s enforcement work into the hands of a senior barrister was a “considerable step forward,” he said.

“It is now Parliament’s job to ensure that this review is completed with enough independence to reassure the public that the regulators conducting it do not pull their punches on the failures of their predecessor institution, the FSA,” Mr Tyrie said.

Pat McFadden, a Labour MP and member of the TSC, said: “It is not for me to decide who is personally culpable, but the public see the contrast between the amount of money they had to put in [to the banks] and what seems to be a lack of individual accountability within the system.”

The FSA came under intense fire in 2010 for closing an investigation into the downfall of RBS without publishing any formal explanation of the events. It subsequently backtracked, also agreeing to release a report into HBOS.

Lord Stevenson and Mr Hornby declined to comment. Mr Crosby could not immediately be reached for comment.

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