FSA bans and fines former HBOS executive £500k
It said that, between January 2006 and March 2008, Cummings failed to exercise due skill, care and diligence by pursuing an aggressive expansion strategy within the corporate division, without suitable controls in place to manage the associated risks.
In his role as executive director of HBOS plc and chief executive of its corporate division, he also failed to ensure that the department adequately and prudently managed high value transactions which showed signs of stress.
Tracey McDermott, director of enforcement and financial crime at the FSA, said: “Despite being aware of the weaknesses in his division and growing problems in the economy, Cummings presided over a culture of aggressive growth without the controls in place to manage the risks associated with that strategy.
“Instead of reacting to the worsening environment, he raised his targets as other banks pulled out of the same markets.
“It is essential that senior executives understand that incentivising revenue over risk is a dangerous folly.”
Despite the ban and fine, the FSA accepted he did make efforts to improve the situation and that he did not act deliberately or recklessly to breach regulations.
It also noted that the full severity of the global financial crisis, and its effects, were “not reasonably foreseeable” during the early part of the time period reviewed.