The story of the HBOS Whistleblower and the lessons learned
Paul Moore was the former Head of Group Regulatory Risk at HBOS (Halifax Bank of Scotland), the fifth largest bank in the UK with over 60,000 staff. He was the only senior risk & compliance executive in UK banking sector to blow the whistle publicly during the financial crisis about the regulatory failures he saw from one of the most senior executive positions of a major UK bank. He was “dubbed” in the press as “The HBOS Whistleblower”.
Paul reported that Sir James Crosby, when he was the CEO of HBOS, dismissed him for reporting that HBOS was in breach of its legal and regulatory requirements because the sales and marketing culture was not balanced by adequate risk and compliance systems. He advised the Board to reconsider its continued strategy for sales growth if it wished to avoid excessive risks to the organisation.
He maintained that failures in governance, risk management, compliance and corporate ethics were at the heart of the banking crisis. In particular, he pointed to strategies with an excessive focus on sales, cultures that facilitated “group think” and resisted challenge, as well as the lack of rigorous oversight and challenge by internal control functions, the non-executive, auditors and regulators.
His highly influential evidence to the UK Parliamentary Treasury Select Committee in February 2009 when he blew the whistle became a global news story and led to questions in the House of Commons and to the resignation of Sir James Crosby who was then the Deputy Chairman of the Financial Services Authority. In his evidence he wrote – “You can have the best governance and risk management processes in the world but if they are carried out in a culture of greed, unethical behaviour and an indisposition to challenge, they will always fail”.
In April 2013, following an in-depth investigation into HBOS, The UK Parliamentary Commission on Banking Standards reported that “The HBOS story is one of catastrophic failures of management, governance and regulatory oversight.” The report described the failure of HBOS as “An accident waiting to happen”, “a colossal failure of management and the Board” and corporate governance which represented “… a model of self delusion, of triumph of process over purpose”. The report described the risk function at HBOS as “… a cardinal area of weakness…” and said it was “…a matter of design, not accident…” by Sir James Crosby and the Chairman, Lord Stevenson. As a direct result, Sir James Crosby gave up his Knighthood.
Paul will tell you “The HBOS story and the lessons learned” and the global media coverage it drew. He uses this educational and highly entertaining personal story to explain what happened at HBOS and the key lessons for all types of organisations to ensure they mitigate major risks. He summarises these lessons under what he calls “The five “C’s”; Culture; Competence and Capability of Control Functions; Corporate Governance (including auditing and accounting); Combining Control Functions to ensure Comprehensive assurance; Company Law and the need for its reform to ensure an adequate separation and balance of power in the Boardroom.
Prior to HBOS, Paul was a Partner at KPMG in London advising banks, insurance companies and asset managers on risk, governance, regulatory compliance and ethics. Paul is a UK lawyer and has over 30 years of experience in the financial sector in these areas.