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Banking commission appoints counsel to cross-examine witnesses

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by Jan Harris
Banking commission appoints counsel to cross-examine witnesses

The Parliamentary Commission on Banking Standards has appointed counsel to cross-examine witnesses during its inquiry into the collapse of Halifax Bank of Scotland.

Barrister David Quest has been appointed to question witnesses in a public evidence session, as part of a sub-committee panel inquiry into the bank.

Andrew Tyrie, chairman of the Commission said: “This should help us to get to the bottom of what went wrong and why.

“By doing so we will be better placed to make recommendations for remedy.”

The panel is using the near collapse of HBOS during the financial crisis as a case study of a failed bank, in order to understand more fully the causes of its failure and the measures need to avoid a repetition.

In an earlier report on the HBOS crisis, the Financial Services Authority (FSA) identified high-risk lending practices, particularly by its corporate division, and said that the bank was guilty of “very serious misconduct”.

HBOS was rescued by Lloyds, which was then forced to seek a £20bn bailout from the taxpayer.

The FSA subsequently fined Peter Cummings, head of HBOS’s corporate loans division, half a million pounds and banned him from the City for life, after it emerged that he had continued to pursue an aggressive growth strategy, even after the financial climate deteriorated.

A new investigation by the FSA into the collapse of HBOS has been launched, but will not be completed before the Parliamentary Commission on Banking Standards issues its report.

Lord Andrew Turnbull, who will sit on the Commission sub-committee panel with Andrew Tyrie, said; “We will not seek to replicate or second-guess the work of the FSA.

“We will be looking at the lessons that can be learned with regard to corporate governance, culture and standards in the banking industry.”

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News posted: October 30, 2012

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