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February 12, 2009

FSA statement on HBOS risk assessment

by Gill Montia

Story link: FSA statement on HBOS risk assessment

The Financial Services Authority (FSA) has issued a statement on issues of risk at HBOS.

Yesterday, the vice-chairman of the FSA, Sir James Crosby, resigned because of allegations that in 2005, during his time as chief executive of the group, he had dismissed Paul Moore, a former head of Group Regulatory Risk at HBOS, for warning that the bank’s pace of growth was dangerous.

In a statement issued today, the FSA has confirmed that specific allegations made by Paul Moore in December 2004 were fully investigated by KPMG and the FSA.

The regulator adds that it concluded changes then made by HBOS were appropriate.

However, the FSA wrote again to HBOS at the end of June 2006, with a further risk assessment that warned the “growth strategy of the group posed risks to the whole group and that these risks needed to be managed and mitigated”.

According to the FSA, today’s statement focuses specifically on the concerns expressed by Mr Moore rather than providing a complete description of the regulatory relationship with HBOS.

Full details of Mr Moore’s allegations and the FSA’s responses are contained in the report.

 

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