Watchdog boss ‘must quit over fraud probe’

Fury at FCA chief’s role as it investigates HBOS scandal

A tOP City regulator is under growing pressure to quit amid raging questions over a massive fraud on small businesses.

John Griffith-Jones, 62, chairman of the Financial Conduct Authority, has been accused of a conflict of interest as his investigators probe a possible cover-up at failed bank HBOS.

Staff at the lender’s turnaround unit in Reading deliberately destroyed small businesses, spending the proceeds on luxury holidays and sex parties with prostitutes. the scandal cost HBOS £245m, and Lloyds, which now owns it, has set aside £100m to compensate the entrepreneurs whose livelihoods were ruined.

the criminals behind the fraud were jailed in February, and the FCA is now examining who knew what at the bank. But campaigners are deeply concerned by the role of Griffith-Jones who was senior partner at HBOS’s auditor KPMG when the fraud took place.

Accountancy giant KPMG gave HBOS a clean bill of health when the fraud gang was operating from 2003 to 2007. Critics believe this makes it impossible for the FCA to be balanced and his resignation has been (pictured), demanded by SNP MP George Kerevan, who chairs Parliament’s business banking group, and thames Valley police and crime commissioner Anthony Stansfeld, whose force investigated the case.

And last night, Lord Myners, a former City minister, joined the chorus of concern, warning the scandal exposed the cosy links between big businesses and the organisations meant to hold them to account. ‘It might not be a sensible idea to put, as the chairman of the FCA, someone who’s essentially an insider,’ he said.

KPMG has audited a string of scandal-hit businesses, including the Co-op Bank, which nearly collapsed after a 2013 accounting scandal. Griffith-Jones was made KPMG’s joint European chairman in 2007. He left in 2012. An FCA spokesman said: ‘John Griffith-Jones was not involved in the auditing of, nor had any role in the wider relationship with, HBOS while a partner at KPMG. While chairman of the FCA, John recused himself from the report into the failure of HBOS and he has no role in the enforcement investigations into HBOS.’