MP who won’t let HBOS off the hook
DURING these fractious times it can seem as if the only point of politicians is to put them in the stocks and pelt them with rotten eggs.
But we shouldn’t entirely forget that some of them are still doing excellent work on behalf of the public, often without fanfare.
One politician every small investor should be thankful to have in the Commons is the Tory MP Andrew Tyrie, who chairs the Treasury Select Committee.
Those who had shares in HBOS owe him and his fellow committee members a particular debt of gratitude for their dogged pursuit of the truth behind the collapse of the High Street lender.
Mr Tyrie is like a dog with a bone – in a good way – as accounting regulator the Financial Reporting Council (FRC) is now discovering.
To recap, the FRC in 2013 decided there were no grounds for an investigation into the conduct of auditor KPMG, who did not ring a very loud alarm about the coming collapse of the benighted lender.
Late l ast year, after a l ongawaited report into HBOS was finally published by City watchdogs, the FRC decided it would, after all, look again at whether there are grounds to pursue KPMG for misconduct.
It will, however, be examining only two areas. First, whether KPMG was right to sign off on the lender as a going concern in the 2007 accounts and second, whether HBOS should have disclosed any qualms about its viability in its financial statements.
As Tyrie points out, this is highly unsatisfactory. The FRC will give no explanation as to why i t has narrowed down i ts i nquiries. Nor does i t see the need to have independent oversight of i ts procedures, by, for instance, a senior QC, as happened with t he main HBOS report.
If it does think there is a basis for a misconduct case, the FRC will haul KPMG before an independent tribunal.
If it does not, it will publish its reasoning. But this all means further delay – and it is not clear whether there would be any effective means of challenging the FRC if it once again claims KPMG has no case to answer.
The FRC should bring in an independent figure now to oversee its investigation and let him or her decide whether or not to hold a tribunal. This discredited organisation should not be allowed to act as judge and jury over whether KPMG is called to account or let off the hook again.
The FRC has given every appearance of reluctance to pursue KPMG and of hiding behind rules and sophistry.
If a regulator wants to mount a vigorous investigation, there is always a way to bulldoze through the red tape.
Tyrie says the FRC needs to act quickly to maintain its public and professional credibility – but without a major mindshift, that is a lost cause.
Charity balls
I HAVE an element of sympathy with Age UK in this week’s row about it plugging energy deals from E.on that turned out not to be the cheapest: that ding-dong is as much an indictment of the ridiculous complexity of tariffs as anything else.
But the idea that charities operate on a higher plane, run by saintly individuals and with every penny going straight to good causes has always been a convenient myth.
The UK’s large charities are big businesses: depending on what exactly they do, they may have multimillion pound investment portfolios, sizeable commercial arms, large numbers of volunteers and staff, and major logistical challenges such as delivering help in difficult countries.
Recent scandals – from Kids Company to the alleged hounding of elderly people for donations to Age UK’s promotion of energy deals, insurance and funeral plans to pensioners – have a common thread, which is lack of proper governance.
They are in a position of huge responsibility, to the donors who give so generously and to the vulnerable people they serve. The problem is not that charities are being too commercial, it is that they are not being business-like enough. If they don’t improve their governance, they risk losing the trust of the British public whose generosity has helped so many.