Sir James Crosby resigns from FSA
The deputy chaiman of the financial watchdog has resigned amid allegations that he ignored warnings that HBOS’ lending practices were unsustainable during his time as chief executive of the bank.
Sir James Crosby, who headed up HBOS from 2001 to 2006, stands accused of ignoring warnings made in December 2004 by Paul Moore, one of the bank’s former risk managers, that the mortgage giant was headed for disaster.
Despite denying the allegations, Crosby has now resigned as deputy chairman of the Financial Services Authority (FSA), a role he has held for two years.
In a statement, Crosby says Moore’s allegations – originally made when he was dismissed by HBOS – were “independently and extensively investigated” on behalf of bank’s board.
“That investigation concluded that Mr Moore's allegations had no merit,” Crosby says. “While I am totally confident that there is no substance to any of the allegations, I nonetheless feel that the right course of action for the FSA is for me to resign from the FSA board which I do with immediate effect.”
Moore yesterday submitted his allegations to the Treasury Select Committee, which raised the issue during the grilling of former Royal Bank of Scotland and HBOS chiefs.
"Being an internal risk and compliance manager at the time felt a bit like being a man in a rowing boat trying to slow down an oil tanker," he said in written evidence. "I certainly knew that the bank was going too fast, had a cultural indisposition to challenge and was a serious risk to financial stability and consumer protection. I told the board they ought to slow down."
Yesterday Lord Stevenson, the former chairman of HBOS, denied that Moore's claims had anything to do with the bank's collapse and blamed problems on the drying up of the wholesale markets.
However, in Prime Minister's Questions today, Gordon Brown said it was "right" that Sir James had resigned.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.