20 November 2015 by Henry Ker
Limited penalties for HBOS top team
Any further action against HBOS’ board, management and regulators is likely to take two years and be limited to industry bans. This is despite having the blame lain squarely at their feet for the bank’s collapse in 2008 in a report by independent barrister, Andrew Green QC.
The investigations concludes that board and senior management failed to set appropriate strategy or challenge a flawed business model.
ICSA Policy & Research Director, Peter Swabey FCIS commented on the report: ‘It is important that lessons are learned both from the detailed report produced by the Bank of England and the FCA on the failure of HBOS and from Andrew Green’s report into the regulatory failures of the FSA in terms of monitoring HBOS. However, it is equally important to ensure that the lessons learned are the right ones. There is disquiet that the production of these reports is seven years after the events to which they relate, but equally that distance in time brings a clarity to events that helps to understand them and to ensure that those against whom further regulatory action may be taken are those guilty of negligence or malfeasance, rather than of poor judgement. Businesses thrive on risk, but that risk must be appropriately mitigated and subject to appropriate governance to ensure that it is carefully weighed against potential benefits and not simply accepted as the easy solution to a business problem. At first sight, it is this failure to assess, recognise and manage increasing levels of risk that left HBOS unable to survive turbulent market conditions.
‘Businesses do fail; and there is nothing wrong with that where all reasonable steps have been taken to prevent this. It rather looks as though some senior executives and board members were guilty of rather more than poor judgement.’
Charities overstate governance costs
A Charity Commission report has shown that many charities may ‘often overstate governance costs’ in their public accounts and annual returns.
The report identifies 76 charities, with incomes of £500,000 or more, with governance costs equating to more than 20% of total expenditure. Only three of these had a ‘reasonable explanation’ for the high figures. 66 of the organisations allocated costs to governance that should have been included in other categories.
‘Amateurish’ school governance must be improve
‘Amateurish’ governance in schools must be improved, according to Ofsted chief Sir Michael Wilshaw. He highlighted concerns about nearly 500 schools and suggested that boards made up of people who are not properly trained are not fit for purpose in a modern educational landscape. He also said ‘good will and good intentions’ of school governors are no longer enough, especially as schools have additional freedoms through academy status.
Overhaul of government's grants system urged
The Public Accounts Committee has called for a review of how the government makes direct and non-competitive grants to charities. The Committee has published a damning report, which describes Kids Company as ‘a 13-year experiment which cost the government £42 million’. Among other measures, the report calls for the development of a register to identify those receiving large amounts of funding from the government.