The report into what went wrong at HBOS is unlikely to be published until the end of the year, it has emerged, as the chairman of the new Financial Conduct Authority faces scrutiny about his handling of the much-anticipated report into the dramatic rescue of the bank in 2008.
John Griffith-Jones was chairman of KPMG ,which audited HBOS before it was rescued by Lloyds Banking Group, and he is now chairman of the new FCA, which has taken on some of the responsibilities from the defunct Financial Services Authority.
At the last public meeting of the FSA, Griffith-Jones admitted he recused himself from discussions about the report when questioned by Philip Meadowcroft, a member of the public, who likened the regulator to "comic opera". Another attending the meeting accused the FSA of being ineffective and criticised £800,000 of payments to three former directors.
Andrew Bailey, deputy governor of the Bank of England, told the meeting that the HBOS report was close to the process of Maxwellisation – where those criticised in the report are shown the parts relevant to them – indicating the investigation is close to being completed. But as this process could take six or seven months the report, first scheduled for publication in March, may not now likely to be published at the end of the year.
"The report is under way and at well advanced stage … [we are] having to go through Maxwellisation. We are approaching that point I think," said Bailey.
The top regulators were addressing the last public meeting of the FSA, which was divided up in April into the FCA and the Prudential Regulation Authority, headed by Bailey and set up inside the Bank of England to regulate big banks and insurance companies.
Griffith-Jones said he did not attend a sub-committee charged with completing and publishing the HBOS report, and had been forced to recuse himself from one board meeting.
Martin Wheatley, head of the FCA, said: "We are working very hard on [the report]. It's a sensitive report. There is a process we've got to work through."
One member of the public, Michael Mason-Mahon, accused the FSA of being a "total failure" as it had never prosecuted a banker and wanted assurances its successor body would be more effective. "It put in fines that can be described as parking tickets," Mason-Mahon said. He also described £800,000 paid to former directors – including £300,000 to former FSA boss Sir Hector Sants – to stop them working for six months as "paying for failure".
Tracey McDermott, head of enforcement, mentioned action against senior individuals such as Tidjane Thiam, the boss of Prudential, and Peter Cummings, a former HBOS head of corporate banking, as evidence that action was being taken. She said 23 individuals had been prosecuted for insider dealing.
Bailey said that it was important to implement the recommendations of the parliamentary commission on banking standards, which last month recommended making top officials more accountable when things go wrong. "We have to have a regime where we are accountable for the institutions we run," said Bailey.
"Many share the frustrations that there has not been enough accountability," added Wheatley. "You can be confident that accountability will rest on the shoulders of the individuals at institutions."
Asked after the meeting if the banking commission's recommendation for a criminal offence of reckless misconduct would result in individuals being jailed, Wheatley said: "The chance of getting a scalp is very complex. You'd hope that if it works as a deterrent there won't be a scalp."
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