Two top financial regulators to be grilled by MPs over the collapse of HBOS
Two of Canada's top financial regulators are to be grilled by MPs next Tuesday over their report into the failure of HBOS.
The House of Commons Treasury Select Committee will question Andrew Bailey, the Prudential Regulation Authority's (PRA) chief executive and Sir Brian Pomeroy, a non-executive Financial Conduct Authority (FCA) director.
The dual regulators last month published a report into how the collapse of HBOS came about, which was reviewed by former building society bosses Stuart Bernau and Iain Cornish on behalf of the committee.
Questions will draw on criticisms of the report made by review, including: the time it took to produce; the tone of questioning towards staff at the now defunct Financial Services Authority, and the delay in beginning the report.
The role of accountant KPMG, hired to audit HBOS, as well as accountant watchdog the Financial Reporting Council (FRC) may also be brought up.
The review warns Treasury Committee should “take a continuing interest” in the conclusions reached by the FRC.
Read more: HBOS report – Crisis probe is the Never-Ending Story
Andrew Green QC, who who was commissioned to write a portion of the report for the regulators, will also face questions, on Monday alongside Bernau and Cornish.
Green’s report recommended the two regulators should open an investigation on whether to ban former HBOS executives from the City.
The results will be published some time “early next year”.
The Department for Business, Skills and Innovation has indicated that it could then take action to ban HBOS executives from wider industry roles depending on the outcome.
Indeed, former senior managers of the banking group are set to be investigated following a report from the banking regulators into the failed bank published in November.
The committee that will question the regulators is chaired by Conservative MP Andrew Tyrie, who has previously spoken strongly on the need for reforms to be introduced.
Read more: How did HBOS collapse?
In November Tyrie gave a speech in which he said: "Regulators should not give in to special pleading from banks in implementing the reforms introduced as a result of the financial crisis."
Meanwhile, in reply to the FCA/PRA report, he said the Parliamentary Commission on Banking Standards "concluded in 2013 that the collapse of HBOS was the result of catastrophic failures of management, governance and regulatory oversight", adding:
The Financial Services Authority was asleep at the wheel, and even the start of the crisis failed to wake them.
The FSA did not appreciate the full extent of the risks facing HBOS. A small number of relatively junior staff were left to do the job at the time, a shocking reflection of the FSA’s lack of awareness.
The FSA was divided into the PRA and the FCA in 2013.