The FSA did not consult the Government or HM Revenue & Customs before deciding not to fine HBOS following “very serious misconduct” at subsidiary Bank of Scotland.
This month, the FSA publicly censured Bank of Scotland for the misconduct, which it says contributed to the Government having to bail out HBOS.
Turner said the regulator did not consult the Government or HMRC before making the decision not to levy a fine against HBOS.
Turner said: “If we had imposed a fine it would have been to the disadvantage of both the private and taxpayer sharehol-ders of Lloyds and would have been a benefit to the rest of the financial services industry through a rebate of the levy. We took the point of view that by imposing a large fine we would be hitting the taxpayer twice.”
John Charcol senior technical manager Ray Boulger says: “This sets an interesting precedent. I think it is a rather questionable judgement, given that other publicly owned firms in other sectors have received fines in the past.”