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Focus of FSA’s HBOS investigation revealed

Lloyds Banking Group has revealed that the FSA’s investigation into HBOS is focusing on Bank of Scotland’s corporate division.

The FSA’s investigation into HBOS was revealed last month when the Treasury select committee published a letter to the committee’s chairman Andrew Tyrie from FSA chairman Lord Turner which said the investigation is underway and that the FSA intends to publish a report covering failings at the bank and the regulator.

LBG’s interim statement, published yesterday, says: “In 2009 the FSA commenced a supervisory review into HBOS. The supervisory review has now been superseded as the FSA has commenced enforcement proceedings against Bank of Scotland plc in relation to its corporate division pre-2009.

“The proceedings are ongoing and the Group is co-operating fully. It is too early to predict the outcome or estimate reliably any potential financial effects of the enforcement proceedings but they not currently expected to be material.”

Enforcement proceedings are a step up from a normal supervisory investigation and could result in fines or penalties if wrongdoing is discovered. The FSA does not usually publish the fact it has started enforcement proceedings until it completes the process and decides to take action against the firm being investigated.

In his letter to Tyrie, Turner says: “HBOS is among the failed firms where we launched enforcement investigations. In HBOS’s case the process is still ongoing, and the final result of the investigations not yet known.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Hopefully this report will not whitewash the HBOS Reading case.

  2. It has taken the FSA long enough to investigate the failings of HBOS as one of the previous directors of Halifax went on record to say that only 15% of all of their mortgages had any income checks carried out pre-2007.

    I would call that a major failing in corporate governance and risk management.

  3. It would be criminal if the the FSA investigation did not prioritise an examination of what occurred at HBOS Reading

  4. In support of Simon Kershaw’s point – the events at HBOS Reading Corporate lending do require the most rigorous investigation. I speak as onbe who sucessfully took action in the county court against Bank of Scotland plc ( trading as Halifax)

  5. Interesting………….

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