FSA fines former HBOS director £500k

| September 13, 2012 | 0 Comments

The Financial Services Authority (FSA) has fined former HBOS director, Peter Cummings, £500,000 and banned him from holding any senior position in a UK bank, building society, investment or insurance firm.

The fine is the highest imposed by the FSA so far on a senior executive for management failings, which in this case occurred between January 2006 and December 2008 when Mr Cummings was chief executive of HBOS’s corporate division.

The FSA judged that:

“Between January 2006 and March 2008, Cummings failed to exercise due skill, care and diligence by pursuing an aggressive expansion strategy within the Corporate Division, without suitable controls in place to manage the associated risks; and between April and December 2008, Cummings failed to take reasonable care to ensure that the Corporate Division adequately and prudently managed high value transactions which showed signs of stress.”

The focus on growth peaked in 2007 but continued into 2008 despite Mr Cummings being aware of concerns within HBOS about some of the markets in which his unit operated, and signs of problems in the economy.

The regulator also found that he was aware the division had “a culture which saw risk management as a constraint on the business rather than an integral part of it”.

However, rather than taking steps to mitigate potential risks, he directed staff to increase market share, even as other lenders were pulling out of deals.

Tags: Financial Services Authority, fined, HBOS, Peter Cummings

Category: Bank of Scotland News, Banking News, Financial Services Authority, Halifax News

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