Treasury Committee calls for investigation into HBOS near-collapse

The chairman of the Treasury Select Committee has called for the re-examination of the need for an investigation following the near-collapse of HBOS in 2008.

Andrew Tyrie has written to both the Financial Reporting Council (FRC) and the Institute of Chartered Secretaries and Administrators (ICSA) following the reports published on the management of the company last month.

In the letters, he has requested that FRC chief exective Stephen Haddrill re-examine the need for an investigation into the auditing of HBOS and has asked ICSA chief executive Simon Osborne about the importance of ensuring accurate minute taking at committee meetings.

In the letter to Haddrill, Tyrie wrote: "The Treasury Committee's independent advisers noted in their written evidence that 'it is important that the FRC should consider its final conclusion very carefully and that there should be transparency in relation to its decision making'. The Treasury Committee now expects this thorough re-examination to be commenced immediately."

HBOS was formed following the merger of the Halifax Building Society and The Bank of Scotland in 2001.

It was bought by Lloyds TSB following its near-collapse, receiving an initial £17bn of public money between them.

"The shortcomings of the audit process were serious," Tyrie said after sending the letters.

"As a result, Parliament’s specialist advisers concluded that the circumstances surrounding the audit, conducted by KPMG, deserved ‘thorough scrutiny by the FRC’."

He said the FRC's decision to turn down the opportunity to launch an investigation into HBOS’s auditor "was a serious mistake".

"Given the findings of the full report, the accompanying report by Andrew Green QC into enforcement and the report of Parliament’s specialist advisers, confidence in the audit process will have taken a knock," he continued.

He added that was "essential" that the FRC carry out the investigation "without delay".