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FSA admits HBOS had risk failings

The FSA has revealed that it did find problems with HBOS’s control infrastructure even before Paul Moore’s sacking.

Yesterday Sir James Crosby stood down from the FSA after a Treasury Select Committee grilled former HBOS chiefs concerning the sacking of head of group regulatory risk Paul Moore in 2004 by Crosby after he explicitly warned the bank of an over-reliance on wholesale funding.

Moore also went to the FSA after his dismissal and said his replacement, Jo Dawson was not “fit and proper” to hold that post, by reason of lack of integrity, lack of experience in risk management, and of general attitude and approach. Dawson was a personal appointment by Crosby.

The FSA has revealed that it had found risk control failings two years before Moore’s sacking.

It says: “The FSA conducted a full risk assessment of HBOS in late 2002 which identified a need to strengthen the control infrastructure within the group. We then conducted a further full risk assessment of the HBOS group to cover all of the group’s business in December 2004, the assessment was that the risk profile of the group had improved and that the group had made good progress, but that the group risk functions still needed to enhance their ability to influence the business, which we saw as a key challenge.”

KPMG subsequently investigated Moore’s complaints, and both the auditor and the FSA says it was satisfied that Dawson was qualified for the position and that Moore’s sacking was not due to him being “excessively robust” in his work.

The FSA also investigated HBOS again in 2006. It says: “Whilst the group had made progress, there were still control issues. We made clear that we would closely track progress in this area. The growth strategy of the group posed risks to the whole group and that these risks must be managed and mitigated.”


Super Saver proves positive

Having been in New Zealand now for nearly a week, I am finding much the same message in this nation to that emerging from Australia. Watching events on the other side of the world, it seems that nervous markets persist but buyers are still to be found as the FTSE 100 index approaches 4,000 or the Dow Jones Industrial Average heads towards 8,000. At least, that is how it was feeling at the middle of last week. I hope things do not alter too fast.

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Alternatives’ specialist Castlestone Management launched in 1996 as a family office and only opened products to the UK retail market last year.

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Image courtesy of Stuart Miles at

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Out there lies a warm ocean of desert islands, sun, sand and palm trees, where individuals can choose how and when to tax-efficiently access their pension fund and realise the retirement dreams they have worked so hard for.


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