Toxic Reputations – easily gained, hard to lose

I allowed myself a wry smile while digesting the Sunday broadsheets this weekend. Spread across their (admirable) Business sections the hubris, incompetence, greed and fall from grace of some of our past leading bankers was writ large. Three particular villains emerge, along with one clownish public agency.

In a withering report, the Parliamentary Commission on Banking Standards identified two former Chief Executives and a former Chairman of failed bank HBOS as the architects of that business’ downfall. The FSA – now disbanded and replaced by a gleaming new Financial Conduct Authority (FCA) – is castigated as toothless, unfocused and a regulator that had lost its way.

Some MPs are now demanding that Sir James Crosby and Lord Stevenson, ex- HBOS CEO and Chairman respectively, be stripped of their titles. As they were awarded, in Crosby’s case at least, for ‘services to banking’ this seems hardly unreasonable. And with a precedent set in the case of the hapless Fred ‘The Shred’ Goodwin, it should be relatively easy to achieve.

Moves are also afoot at Vince ‘I-saw-it-coming’ Cable’s Department for Business to prohibit Crosby, Stevenson and Andy Hornby, Sir James’ successor as Chief Executive, from holding company directorships. It has also been suggested the trio receive a lifetime ban from working in the UK financial services sector.

Harsh? I don’t think so. I still find it incredible that having helped brought the British economy to its knees, caused thousands of low-level banking staff to lose their jobs, and been saved courtesy of billions from already hard-pressed taxpayers, not a single collar has been felt among the scheming, grasping, useless bankers who helped wreck an industry once so admired.

Stripping a few of their titles might make for good headlines but it doesn’t properly punish the guilty. Nor does the imposition of limp fines when the sums involved pale beside the rewards these ‘masters of the universe’ hoovered from the trough during, and since, their years at the helm.

Take one Peter Cummings. Never heard of him? He was Head of Corporate Lending at HBOS and is the one ‘unfortunate’ to have been singled out and fined by the FSA for his part in the debacle.

Having been judged to have behaved recklessly, the regulator initially imposed a fine of £1 million – this, after a three-year investigation into his activities. It was later reduced to £800,000. Cummings’ lawyer subsequently noticed a technical error in the Notice of the Fine causing the FSA to reduce it further to £500,000. Cummings also claims one of the investigators nodded off when interviewing him. You couldn’t make it up.

Now the authorities have three more targets in their sights. What will eventually happen to them remains to be seen, but we now know, courtesy of the Commission’s report, that far from being a helpless victim of the collapse in wholesale lending in 2008, HBOS was already close to insolvency and would have failed regardless of external events. For this, Crosby and Stevenson received their titles and, in the case of the former, a believed £3.5 million windfall from a timely sale of HBOS shares, and a pension pot reckoned to be worth a cool £25 million.

Coming hot on the heels of the multiple scandals at Barclays, the mis-selling of PPI and swap-insurance, continuing public and political dismay with the seemingly unstoppable rise in bonuses, and straightforward incompetence in running basic IT –dependent services, it’s safe to say British banking isn’t enjoying its happiest period ever.

We in the bridging and short term lending sector should remember this next time we feel compelled to self-flagellate or don the hair shirt. We don’t do it that often, I’ll agree, but we’re reasonably good at acknowledging our limitations and weaknesses – in private, at least. And weaknesses and areas of concern there are, but at least we don’t threaten to ruin the economy; nor do we mis-sell or abuse client trust on a level that had become endemic in the so-called mainstream sector.

I hope the FCA remembers this next time it comes calling at our door.

PS: Whoever said that football is a cruel mistress was right – Sunday’s 94th minute equaliser by Wigan effectively condemed my beloved QPR to playing football in what is to be fair, our spiritual home, the Championship next season.

PPS: As I was finishing this week\'s column, I heard of the death of Margaret Thatcher. Politics aside, she was a patriot and a Parliamentary titan - a view shared by friends and foes alike - and made the most profound impact on British politics in half a century. She was also free of scandal, an attribute elusive to so many public figures these days.