Cummings goings: former head of HBOS Corporate division fined and banned by the FSA for “culture of optimism”
leOn 12 September 2012 the Financial Services Authority announced that is fining Peter Cummings – former head of the HBOS Corporate division - £500,000 and banning him from holding any senior position in a UK bank, building society, investment or insurance firm. As the FSA said, “this is the highest fine imposed by the FSA on a senior executive for management failings”.
The FSA press release is here and the Final Notice for Mr Cummings is here. Mr Cummings’ very punchy rejoinder is here, his objections focusing on (i) the FSA’s apparent conflict of interest in being both the regulator responsible for HBOS during its downfall and the body standing judgement over Mr Cummings, and (ii) the seeming unfairness of Mr Cummings having been the only HBOS executive punished by the FSA in connection with its collapse.
The action against Mr Cummings follows the regulator’s public censure of Bank of Scotland in March 2012 when, as we discussed here, it found that between 2006 and 2008 HBOS’s Corporate division lost control, didn’t know what it was doing and continued with a flawed strategy as competitors exited and markets worsened.
The completion of enforcement action against Mr Cummings means that the FSA will now commence work on its report into the causes of the failure of HBOS in 2008, the purpose of which report will be to:
- “explain why HBOS failed and cover the FSA’s supervision of HBOS and explain the focus of the enforcement actions; and
- inform a wider internal and public understanding of the causes of failure during the crisis (to the extent not already covered by the RBS report)”
From the FSA’s press release on its banning of Mr Cummings: