Ex-HBOS directors face inquiry

THE Financial Services Authority (FSA) is probing the conduct of former HBOS directors amid claims they failed to take action over complaints about the bank's small business units.

The FSA inquiry is believed to focus on the former HBOS impaired assets arm, based in Reading, Berkshire, which was reported at the weekend to be the subject of an investigation by Thames Valley police in which six people were arrested in the autumn. It follows allegations that the Reading unit forced business clients to use adviser Quayside Corporate Services in order to get further funding.

A legal action brought against HBOS by Dunham Law on behalf of more than 400 former company directors will claim that large fees charged by Quayside badly hit a number of companies, which were later put into administrative receivership.

Both Lloyds Banking Group, which has owned HBOS since early 2009, and the FSA declined to comment. Dunham Law was unavailable.

It is said that former HBOS chief executive Andy Hornby and former chairman Lord Stevenson are among executives who were contacted by the small firms about the practice from September 2007. Both were unavailable for comment.

The Dunham Law action is set to claim that small HBOS units in other locations, such as Manchester and Northampton, acted similarly.