As I See It
HBOS report: a sorry tale of delay and failure
It is taken so long that a six-year statute of limitations has now passed. It means the Financial Conduct Authority and Prudential Regulation Authority are unable to impose fines on those who ran HBOS during the four years up to 2008 covered by the inquiry.
This is bound to raise suspicions that the whole process stinks and that the City has been able to look after its own, if only because of the number of get-out clauses that provided more escape routes for the suspects than a prison with no locks on the doors.
But there were also self-imposed delays which prompted questions as to why the regulators failed to commission the official inquiry until the Treasury Select Committee forced them to do so in 2012.
Lawyers – who will be the main beneficiaries of this debacle – were locked in argumnets for more than a year as a result of a process known as Maxwellisation which allows those criticised in official inquiries to challenge the investigators’ conclusions.
So far, the only punishments handed out are the £500,000 fine imposed on former corporate loans boss Peter Cummings, and the forfeiture of ex-CEO James Crosby’s knighthood, together with a cut in his pension.
Andy Hornby, who succeeded Crosby, and his chairman Lord Stevenson, have escaped censure, although it could be said that the lasting impact on their reputations has been a stain they will not remove.
Like everyone else they will not see this latest 500-page dossier until it is published on Thursday. It could be said it has been testing on them too by making them wait so long to learn their fate. As things look, they shouldn’t worry too much. It looks like they will be told they have been very naughty boys. And that will be it.
Hindsight, of course, is a wonderful thing. But the delay in publication is inexcusable when so much of what went wrong was already public or at least available from many sources. Books have been written and many column inches filled by others able to draw their own conclusions.
Those of us who sat through the press conferences and results statements at the time could tell that something wasn’t right. The targets – such as the relentless pursuit of mortgage volumes – seemed wrong and misguided and there were whisperings at the time that HBOS was engaged in a dangerous road race with Northern Rock.
Mr Cummings’ apparent freedom to hand large loans to the country’s entrepreneurs whenever they held out their hands, became a figure of curiosity and often held an off-stage mini-conference for journalists eager to know about his latest largesse.
If the investigators can be excused any shortcomings in this report it must lie in the difficulties in prosecuting individuals for what was a collective failure.
As I have argued many times before, while some criminal activity was evident in such things as the fiddling of foreign exchange rates and mis-selling of products, the banking crisis was a result of the collapse of a culture of the sector and those attached to it.
To that extent, it was always going to be difficult to take legal action against individuals who may have been greedy, reckless, incompetent and over-ambitious. These may be undesirable attributes, but they are not criminal.