Seven years after the near-collapse of HBOS, we’re still waiting to hear the official account of went wrong at the bank and at the regulator of the day, the Financial Services Authority. Now we’ll have to wait even longer. The Financial Conduct Authority’s report is to undergo more “Maxwellisation”, the process by which those criticised in the report are allowed to respond.
Hold on, you might say, wasn’t Maxwellisation last year’s excuse for delay in publication? It was – but Maxwellisation seems to be a game with no clear ending. A second wave of interviews is now required to “re-Maxwellise” those people where the level of criticism has increased.
Could re-re-Maxwellisation be on the cards? Ominously, on Tuesday a letter from Andrew Bailey and Sir Brian Pomeroy, the duo now charge of publication of the report, hinted that it might be. After the next set of interviews, “we will also need to consider any further representations we receive in response to this”. Throw in other legal niceties and no “precise timing” on publication can be provided. Bailey and Pomeroy don’t even take a stab at an imprecise timing.
This is ridiculous. Taxpayers contributed £20bn to the bailout of HBOS and we want to know who was to blame. Some HBOS employees invested in the shares lost their life savings. Equally, shareholders in the old Lloyds TSB would like to know if their directors were strong-armed by the Labour government into buying a dud.
By all means let everybody have their say, but Maxwellisation was never supposed to be a means by which powerful people could argue over every last detail of a regulator’s report. When (if?) this farce eventually ends, the government should legislate to ensure there is no repeat. At the current rate of progress, the next banking crash will have happened before the last one has been properly explained.
Ringfencing and belly-aching
Thank goodness for that. As far as George Osborne is aware, Treasury officials are not lobbying the Bank of England to soften the ringfencing regime for banks. The legislation, requiring a fence to be put around the UK retail divisions, has been passed and it’s now up to regulators – meaning the Prudential Regulation Authority at the Bank – to implement the rules.
For good measure, the chancellor said Mark Carney, Bank governor, and the PRA’s Andrew Bailey (him again), are not the sort of chaps who appreciate being leant upon.
That seems reasonably clear. Committee chairman Andrew Tyrie, who was pressed in this column yesterday to secure a firm statement that the government remains committed to ringfencing in its original form, seemed satisfied by the answer. Good.
Now, please, can senior executives Barclays and HSBC stop whining? They don’t like ringfencing but the time for belly-aching is over.
AO World should chill out about expectations
“We continue to expect the business model to deliver as expected for the full year,” say the folk at AO World. Two expectations in one sentence betrays an obsession with wanting to being seen as reliable. John Roberts, pugnacious chief executive of the online retailer of fridges and freezers, should chill out.
Yes, February’s thumping profits warning was embarrassing. Yes, the share price has continued to fall since then, to less than half last year’s flotation price. And, yes, the short-sellers are enjoying their sport at AO.
But Roberts, if he is serious about changing the way Europe buys its fridges, should keep his eyes on long-term prospects. The flotation was absurdly overpriced given AO’s youth and thin profit margins, as argued here at the time, but that’s now history. Just get on with the job of shifting fridges, here and in Germany, and don’t get so easily bruised by the City’s expectation machine.
