The Financial Reporting Council has launched an investigation into the conduct of former Bradford & Bingley group finance director Christopher Willford after he was found to have misrepresented the bank’s financial position at the height of the crisis.
The investigation follows the FCA’s decision to fine Willford £30,000 in December for failings ahead of a rights issue at the height of the financial crisis.
The regulator said he failed to provide the board with up-to-date information about B&B’s financial position, including profits, mortgage arrears and repossessions.
The FRC has now confirmed it has launched its own investigation.
A statement from the corporate governance regulator says: “Following the Final Notice issued by the FCA in December 2013, the Financial Reporting Council has launched an investigation under the accountancy scheme into the conduct of Chris Willford, the former group finance director at Bradford & Bingley.”
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 said 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 said this was particularly significant as it suggested B&B could have fallen short of forecast profit for the year.
However, the FCA did not find that Willford’s conduct caused the failure of the rights issue, or B&B’s subsequent nationalisation.