Former Bradford and Bingley finance director failed to provide accurate information to board prior to collapse.
The former finance director at failed bank Bradford and Bingley has been slapped with a £30,000 fine by the Financial Conduct Authority over his failure to provide accurate information to the board prior to its collapse in 2008.
The regulator said in a statement it has fined Christopher Willford £30,000 for failing to “provide the board with up-to-date information about B&B’s financial position, including profits, mortgage arrears and re-possessions, ahead of its 2008 rights issue”.
The rights issue subsequently failed amid concerns over job losses at the bank and its mortgage book and the bank was nationalised.
Earlier this year the FCA won a Tribunal ruling after Mr Willford had challenged an earlier decision notice imposing a £100,000 fine for failing to exercise due care, skill and diligence in his role as group finance director of the now-defunct bank.
The former regulator, the Financial Services Authority, had originally proposed a £150,000 fine when it issued a preliminary notice in March 2010. The fine was reduced when it produced a final decision notice in October that year.
According to the FCA statement published today (12 December), in May 2008 as B&B was preparing its rights issue Mr Willford received information that suggested that B&B’s financial outlook “might be weaker than expected”. He did not raise this with the board and the information was not provided to prospective investors.
The information Willford received was “out of kilter” with previous forecasts, and showed that bad mortgage debts, arrears and repossessions had all risen, whilst the difference between the interest rates B&B charged to and received from its customers had fallen.
Information uncovered by the FCA found that money set aside against bad mortgage debts reached £35.7m by May, already close to two-thirds of the £56.5m the bank had forecast for that year as a whole.
Arrears and repossessions over the last three months had risen to 2.16 per cent from 2 per cent in March 2008, while the difference between the interest rates B&B charged to and received from, its customers fell to 0.9 per cent, compared to 1.06 per cent in March.
Underlying profit before tax accumulated between January 2008 and April 2008 was only 24.3 per cent of the total forecast for the year.
The FCA added that it did not find Mr Willford’s conduct caused the failure of the rights issue or B&B’s subsequent nationalisation.
Tracey McDermott, the FCA’s director of financial crime and enforcement, said: “Willford failed to identify and investigate potentially material risks, or alert the board, at a crucial time for the firm.
“His conduct fell short of the FCA’s standards – senior managers should expect the FCA to take action if they fail to show due skill, care and diligence.”
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