The FCA has set aside £1m to pay for an inquiry into the failure of HBOS, Money Marketing can reveal.
The review, which will examine why the bank failed and the role of the regulator, commenced in September 2012 and is due to be published by the end of this year.
A Freedom of Information request submitted by Money Marketing shows that as of 25 September, the FCA has set aside £1m for the review. Of this, £228,000 is for the provision of legal advice to staff members.
In July, the FCA published the full terms of the inquiry. The review will cover: why HBOS failed; an assessment of its capital and liquidity positions between 2005 and 2008; the FSA’s supervision of the bank over that period; and the scope of the FSA’s subsequent enforcement investigations, including a fresh consideration of whether any former members of the bank’s senior management team should be subject to investigation.
The role of the regulator will be considered in a separate part of the report that will be written by a team of independent contributors, led by Andrew Green QC.
HBOS received a multibillion pound bailout from the UK government in late 2008. In 2009, HBOS merged with Lloyds Banking Group.
The FSA fined former HBOS executive director Peter Cummings £500,000 in September 2012 and banned him from holding a senior position within the UK financial
services industry. Earlier this year, Money Marketing revealed the cost of the FCA’s inquiry into the announcement of its closed book review had soared to £2.2m, after it set aside an additional £500,000 to cover the cost of legal advice for senior staff.
Investment Quorum chief executive Lee Robertson says: “Unfortunately, legal costs are a necessary byproduct of an inquiry of this nature and if the industry wants a review of HBOS it will have to meet the costs.”
An FCA spokeswoman says: “The costs associated with the review reflect its scope and terms of reference. There have been a number of inputs into this since the review started in late 2012, including the Parliamentary Commission on Banking Standards report into HBOS’s failure and a change in the scope of the enforcement section, as discussed with the Treasury Select committee.”