FSA fines and bans executive director for management failings

17 Sep 2012

The FSA has fined Peter Cummings £500,000 and banned him from holding any senior position in a UK bank, building society, investment or insurance firm. These sanctions were imposed for breaches of Statement of Principle 6 of the FSA’s Code of Practice for Approved Persons occurring between January 2006 and December 2008, and for being knowingly concerned in the misconduct which was the subject of the separate Final Notice issued to Bank of Scotland plc on 9 March 2012 (see Daily News 13 March 2012).

Mr Cummings was executive director of the bank and chief executive of the corporate division. The FSA found that he breached Principle 6 by pursuing an aggressive expansion strategy within the corporate division without suitable controls to manage associated risks and despite knowing of concerns within the bank about the markets that the corporate division operated in. Mr Cummings had directed the division to increase its market share as other lenders were pulling out of deals. The FSA also found that Mr Cummings had failed to take reasonable care in ensuring that the division adequately and prudently managed high value transactions under stress by monitoring their deterioration and passing them on in good time to the “high risk and impaired assets” team for more detailed assessments of the likelihood of default.

The FSA did accept that Mr Cummings introduced some improvements, that critical business decisions were made collectively and that he did not act deliberately or recklessly.

Copies of the final notice (http://www.fsa.gov.uk/static/pubs/final/peter-cummings.pdf);

FSA’s statement (http://www.fsa.gov.uk/library/communication/statements/2012/hbos.shtml);

and press release (http://www.fsa.gov.uk/library/communication/pr/2012/087.shtml) are available.