LONDON (Reuters) - The Financial Conduct Authority (FCA) must impose tougher sanctions on people who have run failed banks, making them personally responsible for their actions, members of the parliamentary commission which published a damning report into the demise of HBOS told Reuters.
Former HBOS Chief Executive James Crosby on Tuesday offered to give up his knighthood and nearly a third of his pension after being denounced by lawmakers for the “colossal failure” that led to his bank’s collapse.
“What we can’t do is allow this gesture to detract us away from the core fundamental point which is that the regulator has got to be holding people personally accountable for their actions,” said Mark Garnier, a Conservative member of the Parliamentary Commission on Banking Standards.
The Commission has asked the FCA to consider banning HBOS’s former chief executives Crosby and Andy Hornby and its former chairman, Dennis Stevenson, from working in financial services.
“The key thing is that at this moment they can carry on working within this industry. There’s no personal accountability. They took not just one but a whole series of disastrous decisions,” said Garnier.
The Commission, tasked with finding ways to reform Britain’s banks, is expected to make recommendations on how the regulator should be empowered to impose sanctions against individuals involved in wrongdoing at banks in the future when it publishes its final report in May.
“They need to be frightened of the regulator, which certainly wasn’t true in the past, and that means that politicians and the government have to back the regulator,” said another commission member, who declined to be named.
Crosby resigned from his role as an adviser to private equity firm Bridgepoint following the report and stepped down as senior independent director at catering group Compass on Tuesday. However, he remains chairman of Moneybarn, a small West Sussex company that lends to people with a bad credit history.
Martin Wheatley, who heads the FCA, has said the culture within banks will only change when individuals are held to account by regulators.
Fred Goodwin, former head of Royal Bank of Scotland, the other large Scottish bank bailed out after the 2008 financial crisis, had his knighthood removed last year and gave up part of his pension in 2009.
Asked on Wednesday if other former HBOS executives should follow Crosby’s lead, a spokesman for David Cameron said the Prime Minister believed it was down to the individuals in question to decide but that Crosby had made the right decision.
The Commission, which includes former finance minister Nigel Lawson and the Archbishop of Canterbury, is expected to make recommendations on whether banks should be able to claw back past bonuses and pension awards in its final report.
Pressure is growing on other past HBOS executives to follow the 57-year-old Crosby’s example after he offered to give up 30 percent of his 580,000 pounds per year pension. As non-executive chairman of HBOS, Stevenson, 67, did not have a pension but Hornby, 46 and now working as chief executive of betting shop chain Coral, is entitled to 240,000 pounds a year from HBOS when he retires.
Peter Cummings, who was head of corporate lending at HBOS and was last year fined 500,000 pounds by the Financial Services Authority for his role in the bank’s downfall, is entitled to a pension worth 369,000 a year.
Reporting by Matt Scuffham; Editing by Giles Elgood