He ain't taking it laying down.
The Financial Services Authority (FSA) has fined Peter Cummings £500,000 and banned him from holding any senior position in a UK bank, building society, investment or insurance firm. This is the highest fine imposed by the FSA on a senior executive for management failings.
The FSA’s action relates to the period between January 2006 and December 2008, during which time Cummings was an executive director of HBOS plc and chief executive of its Corporate Division.
But Cummings ain't having any of it. Here's his statement:
'In 2007 and 2008 the banking industry was almost destroyed in a global liquidity crisis that exposed deep structural flaws in the industry and rocked and in some cases brought down so many institutions, including HBOS, where I had worked for almost 36 years.
'Many people must bear collective responsibility for what happened, including governments and regulators as well as the boards of the banks themselves. But the fact that I am the only individual from HBOS to face investigation defies comprehension.
For the past three and a half years I have been singled out and subjected to an extraordinary Orwellian process by an organisation that acts as lawmaker, judge, jury, appeal court and executioner. The FSA has never had to prove its case to anyone other than itself, and sits safe in the knowledge that few individuals can afford to take it on.
'The decision to single me out for investigation is even more grotesque given that even the FSA has to admit in its notice that other senior people were involved in the critical decisions for which I am taken to task. This is tokenism at its most sinister, and has made it feel throughout like institutional oppression.
'The FSA failed even to interview a significant number of HBOS's senior executives and non-executives, including its former group finance directors and the divisional finance director, in its investigation. This alone highlights the fundamental shortcomings in its investigation, which failed for example to address the question of who set the financial targets that the Corporate Division had to meet.
'When I was appointed to run the Corporate Division in 2006 I took strenuous efforts to improve risk controls and to embed risk as a core competence with the full co-operation and knowledge of the FSA. I appointed a Chief Risk Officer and carried out a series of structural changes to ensure the Division complied with the Basel II capital adequacy rules. I cannot reconcile the close engagement I had with the FSA then with the criticisms they level against me today, other than with their application of lavish portions of hindsight.
'I believe there should be a wholly independent inquiry into the failure of HBOS to identify the full reasons for the failure of the bank. This should not be conducted by the FSA, which has such a clear conflict of interest in the matter given it was responsible for the bank's regulation throughout this period. I reject the notion that work on the substantive Report into the failure of HBOS could only commence at the conclusion of this investigation and find it difficult to understand why a Report of such public significance was delayed in preference to proceedings against one individual said to be involved in it. It is, of course, unrealistic to suggest that action leading to a financial penalty can now be taken against any other individual'.
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