The FCA has fined former Bradford & Bingley group finance director Christopher Willford £30,000 for failings ahead of a rights issue at the height of the financial crisis.
The regulator says Willford failed to provide the board with up-to-date information about B&B’s financial position, including profits, mortgage arrears and repossessions.
The final penalty has been reduced from £100,000 to £30,000 following oral evidence as part of a three-year legal battle between Willford and the regulator.
On 16 May 2008, Willford received information that suggested that B&B’s financial outlook might be weaker than expected.
As B&B was preparing to raise capital through a rights issue, the FCA says this should have immediately been raised with B&B’s board and investigated to ensure that the information provided to shareholders about the rights issue on 19 May was correct.
The information Willford received was out of kilter with previous forecasts, and showed bad mortgage debts, arrears and repossessions had all risen, whilst the difference between the interest rates B&B charged to, and received from, its customers had fallen.
It showed money set aside against bad mortgage debts had reached £25.7m, 63 per cent of the £56.5m forecast for that year, and that arrears and repossessions had risen from 2 per cent in March to 2.16 per cent.
The FCA says this is particularly significant as it suggested B&B could have fallen short of forecast profit for the year.
FCA director of financial crime and enforcement Tracey McDermott says: “Willford failed to identify and investigate potentially material risks, or alert the board, at a crucial time for the firm.
“His conduct fell short of the FCA’s standards – senior managers should expect the FCA to take action if they fail to show due skill, care and diligence.”
The regulator says as finance director, Willford was responsible for escalating and investigating the information and ensuring material provided to shareholders on B&B’s financial position was correct.
The FCA did not find, however, that Willford’s conduct caused the failure of the rights issue, or B&B’s subsequent nationalisation.
It says the size of the fine reflects the length and timing of the misconduct, which took place over three days during the height of the financial crisis.
Willford was B&B’s finance director between October 2005 and June 2009.
The case has been subject to legal wrangling since the FSA issued a decision notice in October 2010. Willford had the decision judically reviewed and won his case in May 2012.
The FSA then went to the Court of Appeal, which overturned the judicial review in June 2013. Since then the FCA has continued the enforcement process it began in October 2010.
The fine against Willford has been reduced from £100,000 to £30,000 after the regulator took into account oral evidence at the various hearings. As a result it narrowed its focus from between 13 and 19 May to 16 and 19 May, and removed references to how Willford carried out his role as finance director.