£7m blown on futile HBOS inquiry: That included more than £2.7m spent on lawyers, accountants and other experts
Pastures new: The bank’s then-boss, Andy Hornby (pictured), is now chief executive of The Restaurant Group
A six-year investigation into the collapse of lender HBOS – which concluded that no further action was needed against its bosses – cost £7.2m, the Daily Mail can reveal.
That included more than £2.7m spent on lawyers, accountants and other experts brought in to help comb through mountains of documents.
Few details of the probe have been made public but now Lord Darling – who was Chancellor at the time – has called for the findings to be disclosed.
HBOS’s collapse came at the height of the financial crisis and ultimately resulted in a £20billion taxpayer bail-out.
The bank’s then-boss, Andy Hornby, is now chief executive of The Restaurant Group, owner of the Wagamama and Frankie & Benny’s brands – and was paid £1.2m last year. A probe by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) into senior managers at HBOS ended earlier this year but the watchdogs have not released any detailed reasoning for the decision not to take further action.
Only a three-page press release announcing the investigation’s conclusions has been produced – revealing that it sifted through 2m documents.
The PRA – which is the Bank of England’s regulatory arm – and the FCA, insisted at the time of the probe’s conclusion in August that it was ‘rigorous and forensic’. They said they had no plans to publish any further details.
But the Daily Mail is today able to reveal that the cost of the investigation – disclosed by the Bank of England under Freedom of Information rules – was £7.238m.
That included internal costs for the FCA and PRA staff who worked on the matter as well as separate costs of two independent decision-making committees within each organisation. It also covers external costs amounting to £2.711m for hiring legal counsel, forensic accountants and contractors to assist. Yet the details of what they found remains shrouded from public view.
Lord Darling told the Mail: ‘There is a clear public interest in understanding why decisions are reached. For justice to be done, it has to be seen to be done. Findings should be made public.’
Halifax Bank of Scotland collapsed in 2008 after racking up £45billion in bad debts. That resulted in a government-engineered takeover by rival Lloyds, which in turn needed to be bailed out by the Treasury to the tune of £20billion, swelling the public sector debt pile.
At the heart of the latest probe was the question of whether former senior managers should be banned from the financial sector. It was prompted by a report that found a previous decision not to investigate ten senior managers, including Hornby and HBOS chairman Lord Stevenson, was ‘materially flawed’.
A separate report in 2015 from the FCA and PRA found HBOS’s board pursued a ‘flawed and unbalanced strategy’ based on lending more money in pursuit of short-term profitability.
Only one former executive, Peter Cummings – then head of Bank of Scotland’s corporate lending – has been punished.
He was fined £500,000 and banned from the City in 2012.