John Griffith-Jones, the chairman designate of the new Financial Conduct Authority, yesterday defended how his former accountancy firm checked the books of HBOS before the financial crisis, telling MPs nobody saw what was coming.
HBOS had to be taken over by Lloyds in January 2009 for £12bn and was later bailed out by the UK taxpayer.
"The accounts of HBOS did bear a sense of reality," said Mr Griffith-Jones, who headed the UK arm of HBOS's auditor KPMG. He was responding to questioning from the Treasury Select Committee about his new job. "Had it been known, the accounts would have been qualified," he added.
The FCA will replace the Financial Services Authority, which is being scrapped and its banking supervisory powers handed to a unit at the Bank of England.
As a non-executive director working a three-day week, Mr Griffith-Jones will leave the FCA's chief executive Martin Wheatley to run the show while he focuses on creating an effective board. He said he favours a set of easily understood financial products as Britain seeks to put an end to costly mis-selling scandals.