FCA chairman Griffith-Jones under fire over HBOS audits

FCA chairman Griffith-Jones under fire over HBOS audits

The new City watchdog was last night fighting to defend its chairman amid accusations that as head of its auditors KPMG, HBOS pursued reckless lending strategy

JOHN GRIFFITH-JONES, the chairman of the Financial Conduct Authority, faces mounting calls to resign for giving HBOS a clean bill of health while chairing KPMG, the Daily Mail reports.

The accountancy giant is also now facing a possible inquiry into its auditing of HBOS after accounting watchdog the Financial Reporting Council said it will “see whether there is a case for an investigation”. 

John Mann, Labour MP and member of the Treasury Select Committee, last night called for Griffith-Jones (pictured), to quit.

He said: “He should absolutely resign. These grossly failed businessmen should not be in any senior positions in any organisation. Griffith-Jones played along with this Alice in Wonderland economics and the taxpayers are now footing the bill.”

Tory MP Brooks Newmark, also a member of the committee, has written to its chairman Andrew Tyrie calling for Griffith-Jones to resign.

HBOS’s reckless lending strategy was described by the defunct Financial Services Authority in January 2004 as an “accident waiting to happen”.

Yet in a devastating report last week, the banking commission highlighted how the regulator took “comfort” from a report by HBOS’s auditor KPMG into the risks taken by the corporate lending division.

KPMG signed off on HBOS’s decision to set aside just £370m for bad loans in May 2008.

Lloyds, which rescued HBOS in 2008, went on to rack up £25bn in losses from its corporate unit between 2008 and 2011 from bad loans made by HBOS, with £46bn in total. KPMG also sided with HBOS after former head of risk Paul Moore raised concerns about the bank’s lending.

Last night, the FCA insisted Griffith-Jones will not be involved in its report into the demise of HBOS.

An FCA spokesman said: “John Griffith-Jones was subject to a rigorous appointment process by HM Treasury, and had an appointment hearing with the Treasury Select Committee.”

This story first appeared on the website of sister title Investment Week

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