The FSA board has set out how it will carry out its report into the failure of HBOS and has revealed the cost of the review will be more expensive than first thought.
The FSA’s board minutes from its September meeting, published today, reveal that Grant Thornton has been chosen to analyse the management, governance and culture at HBOS in the run-up to the financial crisis which led to the bank being taken over by Lloyds Banking Group in September 2008.
The “big four” accountancy firms – Deloitte, Ernst & Young, PwC and KPMG – ruled themselves out of carrying out the analysis into HBOS due to potential conflicts of interest.
The minutes say: “The cost of the review was likely to be higher than initially anticipated although it was expected that it would take three weeks to plan the scope of the review and determine the total costs.
“The estimated cost was not considered unreasonable in view of the scope of the work although the board encouraged the executive to check the reasonableness of the rates of the senior partners who would be involved.”
Lloyds is paying for the review to be carried out.
The minutes also reveal the FSA board discussed that the report into the failure of HBOS “needed to address any perceived influence” former FSA deputy chair Sir James Crosby had on the regulator’s supervision of HBOS, given he had been HBOS chief executive during part of the period the report will focus on.
Crosby resigned from the FSA in February 2009 after whistleblower and former HBOS head of group regulatory risk Paul Moore told a Treasury select committee hearing he warned Crosby in 2004 the bank was growing too quickly.