FCA chairman Griffith-Jones under fire over HBOS audits

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