Dismissed executive 'warned HBOS of risk'

A former HBOS executive claimed today he was fired after raising concerns that the bank was exposing itself to too much risk.

Paul Moore, who was dismissed as head of group regulatory risk in 2005, told MPs it was obvious then that the bank was "going too fast" but nobody would listen.

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In written evidence to the Treasury Select Committee, he insisted the current crisis could have been avoided if there had been adequate systems to hold bank chiefs in check.

"When I was head of group regulatory risk at HBOS, I certainly knew that the bank was going too fast (and told them), had a cultural indisposition to challenge (and told them) and was a serious risk to financial stability (what the FSA call 'maintaining market confidence') and consumer protection (and told them)," he said.

"I told the board they ought to slow down but was prevented from having this properly minuted by the chief financial officer.

"I told them that their sales culture was significantly out of balance with their systems and controls."

Mr Moore held his position at HBOS from 2002 until 2005 - leaving four years prior to its eventual takeover by Lloyds TSB and part-nationalisation.

He was previously a regulation specialist with the financial services firm KPMG.

Mr Moore said that, after suing for unfair dismissal, he received "substantial damages" but was subjected to a "gagging order" preventing him from speaking out.

He had decided to talk publicly about the issue now because, he said, "the public interest demands it".

He went on: "What my personal experience of being on the inside as a risk and compliance manager has shown me is that, whatever the very specific, final and direct causes of the financial crisis, I strongly believe that the real underlying cause of all the problems was simply this - a total failure of all key aspects of governance.

"In my view and from my personal experience at HBOS, all the other specific failures stem from this one primary cause."

Mr Moore said that if there had been strong risk-managers at all of the banks, who could challenge executives without risking their careers, the current crisis would not have occurred.

"Anyone whose eyes were not blinded by money, power and pride, who really looked carefully, knew there was something wrong and that economic growth based almost solely on excessive consumer spending - based on excessive consumer credit based on massively increasing property prices which were caused by the very same excessively easy credit - could only ultimately lead to disaster," he said.

"But sadly, no-one wanted or felt able to speak up for fear of stepping out of line with the rest of the lemmings who were busy organising themselves to run over the edge of the cliff behind the pied piper CEOs and executive teams that were being paid so much to play that tune and take them in that direction."

He added: "The real problem and cause of this crisis was that people were just too afraid to speak up and the balance and separation of powers was just far too weighted in favour of the CEO and their executive."