Big four ruled out of HBOS report due to conflicts of interest

The Financial Services Authority (FSA) has appointed Grant Thornton to conduct a report on the failure of HBOS, after the big four audit and accountancy firms rules themselves out due to conflicts of interest.

The FSA has committed to producing a report into the management, governance and culture of HBOS for the Treasury Select Committee.

FSA Board minutes from 5 September showed that the big four, PricewaterhouseCooper, Deloitte, KPMG, and Ernst & Young, all ruled themselves out over conflicts of interest.

The regulator said the cost of the review was likely to be higher than initially anticipated but it was noted that the total costs of the HBOS report would be less than the FSA’s report into RBS.

The minutes said: ‘Grant Thornton had been chosen for a variety of reasons, including the seniority of the team, the mix of forensic and regulatory skills.’

The regulator fined former HBOS executive director Peter Cummings £500,000 and banned him from holding any senior position in a UK bank, building society, investment or insurance firm in September.

The FSA could not carry out the report until outstanding enforcement actions had been completed.

In October the Parliamentary Commission on Banking Standards launched a separate inquiry into the collapse of HBOS through a panel it has commissioned to gather evidence on the bank.