HBOS whistleblower stands firm

The former head of risk at HBOS who claimed he was sacked for warning over the bank's too-rapid growth today said he stood "firmly and confidently" behind his allegations.

Former HBOS chief executive Sir James Crosby dramatically resigned as deputy chairman of the Financial Services Authority (FSA) after Paul Moore's claims to MPs yesterday.

Mr Moore told MPs it was obvious that the bank was "going too fast", but he was eventually sacked by Sir James as head of regulatory risk in 2005.

Sir James, who resigned after more than five years as deputy chairman of the FSA, said Mr Moore's claims had been investigated by an independent probe and had "no substance".

But he added that he was worried about becoming a "distraction" to the FSA and felt the "right course of action" was to step down from the board.

Mr Moore hit back casting doubts on the independence of the investigation and saying that he had a "significant body of detailed additional evidence" to back his claims.

He said: "I am not interested in blame, even though many people will think that this is what my agenda is.

"People who know me will testify to this but I have to say that I do find it sad that people in such important fiduciary positions find it so difficult to admit their mistakes and to say that they are sorry.

"Fighting to the bitter end is always worse for all concerned."

HBOS was taken over by Lloyds TSB in a rescue deal at the height of the financial crisis last year and the new bank is now 43 per cent-owned by the taxpayer.

Sir James has more than 30 years of experience in the financial industry. In January 1999 he became chief executive of Halifax plc and in September 2001 he was appointed as HBOS's first chief executive, leaving in July 2006.

As the resignation reverberated around Westminster, Prime Minister Gordon Brown said he was "right" to stand down from the City regulator over the allegations

"It is right that we investigate serious allegations that are made about the banking system. These are serious but contested allegations," he said.

Mr Brown also dodged a demand for an apology from Conservative leader David Cameron, who pressed him to admit it was "a serious error of judgment on his part" to appoint Sir James to the deputy chairmanship of the FSA.

Liberal Democrat Treasury spokesman Vince Cable accused Mr Brown of an "utterly inappropriate" appointment.

He said: "It is clear from Paul Moore's evidence that James Crosby was part of the problem, not part of the solution. The FSA needs people with experience, but not the wrong experience."

Sir James has produced two reports for the Government on ID cards and mortgage financing but sought to quell questions over his independence today.

He said: "I am confident that anyone who either worked with me on the reports, or indeed anyone who has read them, will conclude that they are the work of someone who is genuinely independent of government.

"In addition, I want to emphasise that I have absolutely no political connections or affiliations."

The FSA said Mr Moore's allegations had been "fully investigated" by accountants KPMG.

It added: "We would like to thank (Sir James) for his very significant contribution to the FSA over the past few years."