HBOS chief ‘knew his bank mis-sold PPI to millions’
THE disgraced former boss of failed lender HBOS has been accused of ignoring warnings about the mis- selling of PPI years before the scandal broke.
A whistle-blower who worked at the High Street giant claims Andy Hornby was informed by staff that millions of payment protection insurance policies may have been completely worthless four years before the bank’s collapse in 2008.
Mr Hornby, now a senior executive at gambling giant Gala Coral, is also said to have admitted that PPI sales ‘kept him awake at night’.
Senior MPs last night demanded an investigation into the ‘serious allegations’, made by former HBOS senior executive Paul Moore.
The damning evidence was presented in an internal report conducted by Halifax Bank of Scotland’s retail division in 2004, which Mr Hornby, now 48, ran until his promotion to chief executive two years later.
It showed that up to 17 per cent of PPI policies had been sold to customers who would have been disqualified from claiming on the insurance because they were self-employed. Despite this, HBOS continued to sell PPI for years.
In his new book ‘Crash, Bank, Wallop’, Mr Moore – the lender’s former head of risk who was sacked in 2004 after raising concerns about its toxic sales culture – describes a key meeting with Mr Hornby in May 2004.
‘I asked Hornby ... “So, Andy, what keeps you awake at night around here?” Without hesitation, Hornby told me that what worried him the most was sales of payment protection insurance policies’, he said. Mr Hornby is also said to have expressed concerns about an internal report showing that ‘many of the customers sold PPI were not actually covered by the policies’.
Mr Moore added: ‘It is perfectly clear that Andy Hornby knew that the bank was mis-selling to a large group of peo- ple.’ Lloyds Banking Group, which rescued HBOS in 2008 shortly before being bailed out by taxpayers, has so far been forced to set aside £13.4billion to compensate customers. Much of this stems from policies sold by HBOS.
Mr Moore said he was also informed by Mr Hornby that the same 2004 report revealed customers who repaid their loans early were not given a refund on their PPI premiums, which meant ‘customers were paying premiums for the insurance cover from which they could never benefit’.
For years PPI was widely sold alongside credit cards and loans and was billed as a safety net for people who lost their jobs or became too sick to work.
But it was routinely mis-sold to customers who would never have been able to claim. The scandal has led to the big banks setting aside more than £25billion to compensate customers.
A senior Conservative MP last night urged the City watchdog to investigate the claims against Mr Hornby.
Andrew Tyrie, chairman of the Treasury Select Committee, told the Mail: ‘These are very serious allegations. Parliament will expect the regulator to get to the bottom of them. I will be writing to ... the [Financial Conduct Authority], about them in due course.’
The claims emerged as the FCA and the Prudential Regulation Authority prepare to publish their report into HBOS’s collapse. It is expected to conclude whether any action should be taken against the bank’s former executives, who have so far escaped punishment despite being accused of ‘catastrophic failures of management’.
One MP last night said he would refer Mr Moore’s allegations to the Justice Committee. Labour MP Barry Sheerman said: ‘The executives who led our banks ... to destruction should by now already have been prosecuted and they should be looking at long sentences.’
Mr Hornby did not respond to requests for comment, but speaking on his behalf a Gala Coral spokesman said the firm ‘declined to comment on events related to another organisation that are alleged to have happened over ten years ago’. Lloyds said it could find no record of the HBOS PPI report.
‘Worthless policies routinely sold’