Former top UK accountant defends audit of rescued HBOS
By Huw Jones | November 7, 2012 1:35 AM EST
A former top accountant defended how his firm checked the books of HBOS before the bank was rescued in the financial crisis, saying nobody saw what was coming.
HBOS had to be taken over by Lloyds
"The accounts of HBOS did bear a sense of reality," said John Griffith-Jones, who headed the UK arm of KPMG
Griffith-Jones was responding to questioning from a group of legislators about his new job as chairman designate of the Financial Conduct Authority (FCA).
"Had it been known, the accounts would have been qualified," Griffith-Jones told the UK parliament's Treasury select committee.
The accounting industry is under scrutiny for giving banks a clean bill of health just before many were rescued and the sector faces reforms to make auditors more sceptical of what clients tell them and more willing to express concerns directly to regulators.
The FCA will replace the Financial Services Authority (FSA), which is being scrapped and its banking supervisory powers handed to a unit at the Bank of England. The reform is aimed at plugging supervisory gaps highlighted by the 2007-09 crisis.
A report by the FSA into the rescue of HBOS is due to be released in the middle of 2013.
Lloyds is one of Britain's "Big Four" lenders and lawmakers are pushing for new challengers in the market in the hope this will create increased competition to the benefit of consumers.
For the time being, though, banking is seen by many as not competitive enough, symbolised by difficulties in moving accounts from one lender to another. Switching accounts was "six weeks of pure hell", one lawmaker said.
Just six weeks into the job as non-executive chairman of the FCA, which will be launched in April, Griffith-Jones said he had not changed his bank account for 50 years.
The FSA will present a report next month on making it easier for challenger banks to get authorisation, such as by scaling back initial capital requirements.
But there was no quick fix to increase lending to the economy, which would depend on existing banks in the near term.
As non-executive director working a three-day week, Griffith-Jones will leave FCA Chief Executive Martin Wheatley to run the show while he focuses on creating an effective board.
He favours a set of easily understood financial products as Britain seeks to put an end to costly mis-selling scandals.
"If we treat everyone as if they can't add up, then we create a whole bundle of cotton wool. If we don't do anything, then we have people disadvantaged in the less numerate category. We have to make sure there are simple products everyone can understand at one level," he said.
(Editing by David Holmes)
Most Popular Slideshows
- Taylor Swift Named Forbes' Second Highest Paid Country Musician [PHOTOS]
- Forever Lost: Indescribable Anguish for Malaysia Airlines MH17 Families, Remains of Some Victims May Never Be Found (PHOTOS)
- Celebrities Who Got Pregnant Using IVF: Busting the Myths About IVF
- PageSix: Beyonce & Jay Z Union is Not About Love, All About Business & the Brand
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Freshly Leaked Apple iPad Air 2 Cases Confirm Touch ID Sensor; Release Date, Limited Specs and Price Listed
- Moto X Android 4.4.4 KitKat Update Guide: Schedule and How to Install
- Top 4 Reasons Why iPhone 6 Will Hit Big Soon After its Sept 2014 Release Date
- Top Surprising Features Of iOS 8
- Twin Malaysia Airlines MH370, MH17 Aviation Disasters Create Phobia Among Travellers
- OnePlus One vs. Moto X+1 – Early Specifications, Release Date and Price Faceoff
- 2014 Ebola Outbreak: ‘Out of control… and Can Get Worse'; Asky Airline Stops Flying to Liberia, Sierra Leone; Liberia Closes Schools