MPs slam FCA in HBOS report

REGULATORS “asleep at the wheel” during the second worst failure in Britain’s banking history are today called to account in a damning report on their response to the near-collapse of HBOS more than seven years ago.

A report by the House of Commons Treasury Committee accuses financial industry watchdogs of “spectacular failures” and claims there is still more to be done to win public confidence.

MPs branded the decision by the Financial Reporting Council not to investigate the auditing of HBOS before it had received all the information on the crisis a “serious mistake” and the organisation had shown a “lack of curiosity and diligence”.

The committee argues that the case for a new enforcement body, previously rejected by the Treasury, merits “serious re-examination” and urges the Treasury to appoint an independent person to undertake a review.

HBOS was acquired in a rescue deal by Lloyds TSB in 2009 before a £20billion taxpayer funded bailout of the combined group.

Andrew Tyrie, pictured, chairman of the Treasury Select Committee, said: “The regulators failed, both before and after the HBOS crisis. Seven years on, we now know just how badly... It took persistent pressure from the Treasury Committee to ensure these failures weren’t swept under the carpet.

“So the HBOS experience called for the Financial Conduct Authority and Prudential Regulation Authority to exhibit greater vigilance and energy if they are to win public confidence. This has on occasion been lacking.

“A lot is at stake. The fact is the Financial Services Authority did not succeed in protecting consumers from spectacular regulatory failures. The creation of the FCA and PRA has been an opportunity to build something much better. This is still work in progress, particularly at FCA.”