Supplementary memorandum from Lord Stevenson
of Coddenham
As promised when we met on 10th February, I
am writing to enclose a copy of the Report prepared by KPMG in
2003. As I explained when I appeared before the Committee, whilst
HBOS was comfortable that everything in relation to Mr Moore's
departure from the Company was handled properly, we took the allegations
made by Mr Moore very seriously. As soon as the then CEO learned
that Mr Moore was unhappy with the process that led to him not
being offered the job as Risk Director and had concerns about
the handling of risk management, the CEO told the FSA and the
HBOS Board. As a result of the process of consultation that followed
with the Chairman of the HBOS Audit Committee playing a major
role, we asked KPMG to look in to those allegations independently.
That is how the KPMG Report came about.
The scope of the KPMG review is set out in the
five bullet points in paragraph 1.1, as well as the supplementary
issue referred to in paragraph 1.2. As the Report makes clear,
KPMG conducted about 80 hours of meetings and interviews involving
28 individuals, and reviewed large quantities of HBOS documents
(in addition to the documents produced by Mr Moore). As a consequence,
Mr Moore's allegations were not substantiated, and the Company's
position was validated.
I do not believe it is necessary or appropriate
for me to summarise the Report, which speaks for itself. You will
have seen, however, the statement made by the FSA on 11th February
2009, which includes a number of quotes from or references to
the conclusions in the KPMG report, including the following:
— that the structure and reporting
lines of Group Regulatory Risk were appropriate;
— there was no evidence to suggest
that Mr Moore was dismissed for improper reasons. There was simply
no role for Mr Moore in the revised structure that followed the
creation of the Group Risk Director role;
— the process for identification and
assessment of candidates for the GRD (Group Risk Director) role
was appropriate; and
— KPMG believed that the evidence reviewed
suggested that the candidate (for the Group Risk Director role)
was appropriately "fit and proper".
Separately, I understand that the Chairman of
the Financial Services Authority may have written to the Chancellor
of the Exchequer in very similar terms to the FSA 11th February
statement.
If I can help the Committee with respect to
any further information that it requires, please do not hesitate
to let me know.
26 February 2009
Review of issues set out in the Outline
of Case from Paul Moore
KPMG BOARD PAPER FOR HBOS PLC GROUP AUDIT
COMMITTEE—28 APRIL 2005
1. INTRODUCTION
Background
1.1 Paul Moore raised a number of issues
concerning the operation of the Regulatory Compliance control
environment within HBOS plc ("HBOS") in the "Outline
of Case" dated 13 December 2004. You have instructed us to
undertake an independent review of the issues raised by Mr Moore.
We held an initial clarification meeting with Mr Moore following
which we agreed the scope of our terms of reference with you.
These were shared with Mr Moore. In accordance with our engagement
and scoping letters dated 17 and 24 January 2005 respectively
we have undertaken a focused review of:
— the Group Regulatory Risk ("GRR")
relationship with the Board, the executive divisional management
and relevant associated risk and audit committees;
— the appropriateness of GRR structure
and processes for fulfilling their oversight and monitoring responsibilities;
— the chronology, methodology, reporting
and follow-up resolution of the Mortgage Endowment Complaints
("MEC"), Corporate Bond Fund ("CBF"), and
Sales Culture ("SCR") reviews performed in 2003/2004
and relevant recommendations set out in Appendix 1 of the PWC
report on the risks management framework;
— the appropriateness of the Group's
processes for identification and assessment of candidates for
the Group Risk Director and appointment of Jo Dawson; and
— whether the Group followed its defined
processes when making the position of the head of GRR redundant.
1.2 You subsequently asked us to consider
whether the way in which the CBF, MEC and SCR reviews were approached,
the reaction to them and the follow-up response are indicative
of a Group that takes its regulatory responsibilities seriously.
Work performed
1.3 Our work has involved undertaking interviews
and reviewing documentation provided to us by HBOS. We have focused
our work on the areas highlighted by Mr Moore, in particular the
reviews undertaken in respect of MEC, CBF and SCR. In the Outline
of Case, there is also introductory references at paragraphs 3
and 4 (expanded in paragraphs 45-56) about the appropriateness
of the appointment of Ms Dawson and we address the regulatory
issues arising, below. We have not considered any other reviews
undertaken by GRR within the Retail or other HBOS divisions.
1.4 In addition to the regulatory issues
raised, the Outline of Case also raises employment issues (eg
Paragraphs 5 and 6 of the Outline of Case). These fell outside
our expertise and we have not considered any aspects of employment
law, including reference to the Public Interest Disclosure Act,
during the course of our work.
Interviews
1.5 We have undertaken around 80 hours of
interviews and meetings with 28 individuals (see appendix 1) during
the course of our work including a number of third parties. Following
each interview and meeting we have prepared a record of the discussion
and asked for comments from individuals concerned. Where individuals
have provided amendments or additional comments we have considered
the comments, revised and re-issued the transcript meeting note
if appropriate.
1.6 We have undertaken the interviews and
discussions on a confidential basis.
Document review
1.7 During the course of our work we have
requested, reviewed and analysed a variety of documents. Appendix
2 lists the key documents. These documents have all been provided
by HBOS, consequently we have not attached them to this report.
1.8 Throughout the course of our work we
have made document requests and have relied upon the information
provided to us and have not verified this information for accuracy.
We have also assumed that all the documents relevant to the requests
have been provided.
Reporting
1.9 You have requested we set out our findings
in a short "board paper" style report. Our usual report
format would be longer and detail all the information and documentation
gathered during the course of our work together with our analysis
of this information and documentation.
1.10 This report to the HBOS Group Audit
Committee sets out our findings in respect of the work we have
undertaken relating to each of the bullet points at paragraph
1.1. We reported our preliminary findings orally to the Group
Audit Committee on 8 March 2005 and the content of this report
it consistent with those findings.
1.11 We found that there were some discrepancies
between the exact dates and chronology of events arising from
the interviews conducted. On occasion we have used our best judgement
to identify the relevant dates and chronology. However we do not
believe that such judgements are critical in forming our views.
1.12 On occasion we have referred to certain
classes of individuals within the report, for example the non-Executives.
Where we have done so this should be taken to be individuals that
we have interviewed which fall into that class rather than the
whole of that class.
1.13 This report is confidential. It may
not be disclosed, copied, quoted or referred to in whole or in
part, whether for purposes of disciplinary proceedings or otherwise
without our prior written consent. Such consent, if given, may
be on conditions including, without limitation, an indemnity against
any claims by third parties arising from release of any part of
our report. KPMG will not be held responsible or liable to any
third parties who may come to act upon this report without prior
written consent of KPMG.
1.14 We have structured this report as follows:
— Section 2—GRR's relationships
with key stakeholders.
— Section 3—GRR's structure and
process for fulfilling their oversight and monitoring responsibilities.
This section incorporates our consideration of the reviews undertaken
in respect of MEC, CBF and SCR.
— Section 4—The appointment of
the Group Risk Director.
— Section 5—The redundancy of
the Head of GRR position.
2. GRR'S RELATIONSHIPS
WITH KEY
STAKEHOLDERS
Background
2.1 This section summarises the comments
we have received concerning GRR's relationships with key stakeholders.
Mr Moore's role as Head of GRR and his personality resulted in
many people identifying GRR and Mr Moore as being one and the
same. It should be noted that Mr Moore, as Head of GRR, was regarded
as the natural point of contact and seen by many to have been
GRR. As such most of the comments offered by interviewees are
personalised to Mr Moore and perceptions of his performance in
his role as Head of GRR.
Senior Executives
2.2 The views of the Executive Directors
were mixed. Most recognised that Mr Moore had sound technical
skills and that he gave GRR a sense of purpose. In particular
it was felt that he created the right environment within GRR through
recruiting strong individuals and building a team spirit. A number
of senior Executives referred negatively to Mr Moore's behaviour
and performance at meetings. Some also noted that increasingly
throughout 2004 Mr Moore brought his deputies to meetings. There
was a mixed view about his capability to successfully execute
the role of Head of GRR. Concerns were expressed that Mr Moore
was not able to step up to the more demanding role of Head of
GRR from his previous position within IID.
The non-Executive Directors
2.3 By late 2004 the Non-Executive Directors
interviewed had a consistent view of Mr Moore. Most considered
Mr Moore to be an intelligent individual, technically strong with
a great deal of experience. However, consistent negative comments
were made regarding Mr Moore's personal behaviour and relationship
skills. In particular, reference was made to Mr Moore's performance
at various formal meetings in both 2003 and 2004, the most notable
being the 8 June 2004 Group Audit committee meeting, which was
commented on widely.
2.4 During 2004 Mr Moore held individual
meetings with a number of non-Executives. Some of these were not
comfortable with these meetings as Mr Moore had not always exhausted
other reporting channels, they did not see this as a non-executive's
role; and, he tried to impose an element of confidentiality to
the meetings. In contrast Mr Moore did not have a private meeting
with the Chairman of the Audit Committee until December 2004 after
the announcement of his departure. This is despite requests being
made by the Chair of the Audit Committee in March 2004 for a meeting
to be scheduled to discuss whether the GRR team needed a different
relationship with the Audit Committee.
2.5 The non-Executives interviewed lost
confidence in Mr Moore at different times following a range of
events. It is now clear that some were nervous about his appointment
to the role of Head of GRR, while others became increasingly concerned
following on from specific events during 2004.
The FSA
2.6 In January 2004, HBOS received an FSA
Arrow letter which highlighted a number of key concerns: one key
outcome being was the FSA's decision to raise HBOS's ICR by 0.5%.
The significance of this signal was recognised by HBOS. Senior
management were upset by the FSA's decision to raise the ICR at
that time but the response to the concerns raised by the FSA was
constructive. Mike Ellis (Group Finance Director—to whom
the Risk functions reported) in particular was focussed on implementing
the necessary corrective actions across the main business control
functions. These, as noted in the outline of Case were Sales Cultural
(Retail), Credit Process (Corporate), Embedded Value (IID) and
Risk (Group Functions). The efforts by the senior management team
were rewarded towards the end of 2004 when the FSA agreed to remove
the 0.5% increase from the ICR.
2.7 Throughout this period the FSA wanted
to develop a "close and continuous" relationship with
HBOS whereby they could place increased reliance on the group
control functions including all the risk functions and internal
audit to mitigate the risks the Group opposed to the FSA's objectives.
The Outline of the Case seems to indicate that this "close
and continuous" relationship was special to HBOS. It is a
general term used for all major groups supervised by the FSA and
a feature of most large financial institutions' Risk Mitigation
Programmes.
28. Mr Ellis retained ultimate responsibility
for the FSA relationship as stated in his Management Accountability
Plan ("MAP"). The FSA directed a number of its communications
through the Divisional leadership. The pattern of meetings with
the FSA led to Mr Moore being bypassed in respect of certain communications
although a member of this GRR team attended the majority of FSA
meetings. In the case of both the MEC and SC reviews, senior executives
liaised directly with the FSA. This was consistent with the importance
being attached to reducing the ICR. From the FSA's perspective
in particular, James Davies is credited with developing a good
relationship with the regulator.
3. GRR'S STRUCTURE
AND PROCESSES
FOR FULFILLING
THEIR OVERSIGHT
AND MONITORING
RESPONSIBILITIES
Background
3.1 HBOS takes a devolved approach to regulatory
risk management and adopts a "three lines of defence"
governance model. The first line of defence rests with the Business/Operating
division and includes the divisional risks teams. The second line
of defence is provided by the Group Risk functions (including
GRR) and the third line of defence is provided by Group Internal
Audit. The devolved model of risks management in place at 30 April
2004 was subject to a S166 review by PWC. PWC concluded that the
model used was conceptually well designed and appropriate for
HBOS.
3.2 Paragraphs 9-11 of the Outline of Case
summaries the responsibility of the Head of GRR to oversee the
adequacy, effectiveness and compliance of the systems and controls
in place within the HBOS Group, as the compliance oversight control
function CF10. It is in this context that the Outline of Case
goes on to raise a number of issues concerning the Regulatory
Compliance control environment within HBOS.
3.3 The Head of GRR is clearly an important
role within the Regulatory Compliance control environment; however,
this individual does not carry sole responsibility for Regulatory
Compliance. It is the responsibility of all senior management
who are in a position of significant Influence to raise challenges
and oversee systems and controls. This is consistent with the
FSA's rules concerning Senior Management Systems and Controls
("SYSC") and in particular the code of practice for
approved persons ("APER").
3.4 Within HBOS responsibility and accountability
for systems and controls is set out within the MAPs. The MAPs
set out the interaction of the senior management team. This interaction
needs to work in practice to enable an effective governance structure.
There is a good understanding of these responsibilities based
on our discussions with the executives interviewed.
GRR structure and resources
Reporting lines
3.5 Prior to his appointment as Head of
GRR Mr Moore was responsible for the Group Regulatory Risk function
within the Insurance and Investment Division ("IID"),
reporting to both Phil Hodkinson as Head of IID and Arthur Seiman
as head of GRR. The IID Group Regulatory Risk ("IID GRR")
team's remit included oversight of the Retail division's regulated
products which were managed by the Retail Advisory Sales team.
3.6 In October 2003 Mr Moore was appointed
Head of GRR (effective 1 January 2004) and the IID GRR function
was subsumed within GRR. Prior to this restructuring, it is clear
there was confusion concerning the role of the two Group Regulatory
Risk functions and its oversight responsibilities. His confusion
arose from there being:
— no clear reporting or responsibility
lines between GRR, IID GRR, Retail Regulatory Risk ("RRR")
and/or Retail management;
— no clear definition of the `functional
leadership' or `oversight' role that GRR and IID GRR should undertake
as referred to in the `Overview of HBOS Corporate Governance'
dated 18 September 2001 and Management Accountability Profiles;
and
— overlap between the two Group Regulatory
Risk functions overseeing the Retail Division.
3.7 Appropriate reporting lines for the
Group Regulatory Risk functions were in place during 2004. The
Head of GRR reported in to the Group Financial Director and also
had the right to escalate any key issues to the Divisional Chief
Executives and where necessary the Group Chief Executive. In addition,
the Chairman of the Audit Committee was also available to the
Head of GRR.
3.8 Whilst the restructuring referred to
above removed the confusion surrounding the interaction between
IID GRR and GRR, confusion surrounding the remit of GRR remained
during 2004 (see below). In addition, no further clarity was given
regarding the definition of "functional leadership"
or "oversight". Confusion arose, in particular, over
the interaction between GRR and RRR. A draft Memorandum of Understanding
existed between the functions. However, it is not clear what reference
was made to it or reliance placed on it by GRR and RRR.
GRR Business Plans
3.9 One of the first tasks undertaken by
Mr Moore on his appointment as Head of GRR was the preparation
of the 2004-05 GRR Business Plan and Strategy document ("Business
Plan") which was tabled at the 9 December 2003 Audit Committee
meeting. This document was subsequently amended to take account
of the FSA's views and outcome of the FSA Arrow Risk Assessments.
It was re-presented to the Group Audit Committee on 9 March 2004.
In addition, the Business Plan was further discussed as a private
Audit Committee meeting held on 8 June 2004.
3.10 The 2004-05 GRR Business Plan and Strategy
document is a high level document. A GRR conference was held in
late February 2004 at which an oral presentation alongside the
Business Plan seems to have worked well. The lack of risk assessment,
detailed plans or operating methodology in the Business Plan would
have made it more difficult to be cascaded as a stand alone document.
By not actively rolling out the Business Plan to the Retail division
management. GRR missed an opportunity to explain their assessment
of the key regulatory risks facing the Retail division and action
planned to address these risks. As a result GRR does not appear
to have effectively engaged key stakeholders thereby missing an
opportunity to address some of the confusion surrounding GRR's
remit.
3.11 The 2005-06 GRR Business Plan and Strategy
document was presented to the Retail Risk control Committee on
2 December 2004 and to the Group Audit Committee on 7 December
2004. This document is more detailed than the 2004-05 Business
Plan and includes a section on risks detailing a timetable of
work to be undertaken during 2005. We have received comments and
agree that this document was a significant improvement on the
2004-05 Business Plan.
Communication and interaction between parties
3.12 Concerns were raised at the 8 June
2004 private meeting of the Audit Committee regarding the quality
of the Business Plan. Comments refer to a lack of content, the
self-promotion of GRR and it being to driven by the requirements
of the FSA rather than the business. At this meeting Mr Ellis
supported the document as "a good motivational tool for
colleagues within Group Regulatory Risk and the challenge remained
to address the focus of resource and ease the tensions between
GRR and the Businesses". We have seen nothing to suggest
that the comments raised at the meeting were communicated to Mr
Moore. However, the fact that this meeting needed to be held was
one of the contributory factors leading to the non-Executives
losing confidence in Mr Moore.
3.13 It is not clear how the Business Plan
was rolled out to the Retail or other divisional management teams.
None of the relevant interviewees could recollect such a roll-out.
The minutes for the group Management Board, Retail Risk Control
Committee and Group Operational and Regulatory Risk Committee
meetings which took place during the period November 2003 to December
2004 do not indicate that the 2004-05 GRR Business Plan and Strategy
document was presented at any of these forums. Mr Moore has stated
that the content of the Business Plan was orally explained to
certain Executive Directors. In any case, the 2004-05 Business
Plan did not address the confusion concerning GRR's remit.
3.14 The confusion concerning GRR's remit
led to tension about the role of the first and second lines of
defence. With strong communication and relationships between GRR,
RRR and the Retail business the lack of clarity as to GRR's remit
could have been overcome. As neither of these was present these
difficulties were not addressed and were a recurring issue throughout
2004.
Resources
3.15During 2004 Mr Moore was supported by two
deputies. The budgeted headcount for GRR was 130 individuals of
which approximately 43 were to provide oversight and advisory
services. In addition, GRR had access to external resources (advisory
firms and contractors) when required, for example for the Advice
Checking Team, CBF and SC reviews. No adverse comments regarding
the resources available to GRR have been made to us. Parties external
to GRR have commented on the high quality of the team recruited
into GRR during 2004 and credit Mr Moore with this.
Performance of GRR's oversight function
3.16 Throughout 2004 and at the time of
our review GRR did not have formally agreed the documented operational
procedures and standards of practice in place. To an extent this
can be attributed to the timing of the changes in leadership and
strategic direction of GRR in late 2003/early 2004. The 2005-06
Business Plan recognised that improvements were needed in this
area and this is now being addressed. Our consideration of the
MEC, CBF and SC reviews has identified a number of issues regarding
the process adopted by GRR. These fall into a number of areas
as set out below. Notwithstanding the points noted below, comments
have been made that Mr Moore made improvements within GRR in the
areas of recruitment and development a more challenging review
process.
Review identification and scoping
3.17 GRR split their work between three
areas—Business as Usual, Group-Wide Themed and Operational
Division themed. However, it is not clear how GRR decided what
work was to be undertaken or the priority to be attached to the
work. In addition, it is not clear whether GRR undertook a methodical
risk analysis to identify areas to be addressed. If this did happen
we have not seen any documentation.
3.18 The nature of Group-Wide and Operating
Division themed reviews is not fully explained within the GRR
Business Plans. Operating Division themed reviews has the most
potential for overlap with the work undertaken by RRR, the Memorandum
of Understanding between GRR and RRR does not explain GRR's approach
in this area. If the terms of reference and scope of reviews are
not agreed in advance it is possible to see how RRR's and divisional
management's confusion regarding GRR's remit could arise.
3.19 The extent to which GRR communicate
with RRR and considered RRR's work when planning their work for
example on the CRF review is not clear, GRR did not share the
terms of reference of their review with all key stakeholders;
Jo Dawson (Head of Retail Advisory Sales) says she did not receive
a copy, although RRR and some of her direct reports were aware
of this review. Mr Moore finds it extraordinary that Ms Dawson
was not aware of this review.
3.20 Similarly with respect to the SC review,
it was not communicated clearly how the GRR work was to interact
with, or build on, the work RRR had already commenced in this
area. The lack of transparency concerning Operating Division themed
reviews and in some cases product specific reviews (eg the CBF
review) has had a detrimental effect on the trust and respect
between GRR and RRR.
Reporting
3.21 The general consensus is that the substance
of the overall findings and underlying work performed by GRR staff
whilst carrying out the three reviews was of an appropriate standard
to meet the scope. This is borne out by the nature of the changes
between initial and final drafts of the reports, these are mainly
factual and editorial and would be expected in such circumstances.
3.22 Other HBOS departments such as Internal
Audit grade their reports and recommendations. The Retail Businesses'
management assumed this style would be adopted by GRR. There are
arguments both ways as to whether reports should be graded. GRR
do not grade their reports. This left the reports open to misinterpretation
by the divisions as to the importance of the issues and potential
impact on the business. There was criticism about the style of
the early drafts of the reports. This was accepted as a contributing
factor to the tension over the CBF report by members of the GRR
team.
3.23 Mr Moore considers that the views expressed
in the final reports or board papers for the MEC, CBF and SC reviews
were diluted compared to the views in earlier drafts. We do not
believe that the findings in the final reports prepared in respect
of the MEC, FBF and SC reviews differed significantly from the
conclusions reached in earlier drafts, albeit there were some
editorial change. This has been confirmed by the interviewees
involved in these reviews.
3.24 Mr Moor stated that when drafting the
MEC report, he allowed the criticism of the way Retail management
had been running the mortgage endowment complaints to be "softened"
by the Retail division. He expressed concern that as a result
of the changes to the report the confidence of the FSA in him
may have been damaged. Senior management thought he had been too
hard on himself. As stated above the findings in the final report
did not differ significantly from those in earlier drafts.
3.25 The FSA's findings from its own review
of the MEC differed to those GRR, and initially the FSA reacted
adversely. The main difference between the findings of the GRR
review and the FSA's on-site review in January 2004 centred around
the GRR conclusion that the rejection rate of complaints was justifiable.
The FSA concluded from its own file review (based on a different
sample) that there were grounds to believe that a significantly
higher percentage of rejected complaints should have been upheld.
In addition the FSA considered the GRR review concentrated on
the process of complaints handling the FSA threatened Enforcement
action if the matter was not addressed by HBOS. Senior management
have expressed the view that Mr Moore felt "scarred"
by the FSA response to the MEC work undertaken by GRR; this might
be a relevant factor when considering Mr Moore's concerns regarding
the CBF and CR reports.
3.26 James Davies and Andy Sheppard were
involved in producing the five drafts of the CBF report. Whilst
Mike Ellis prepared a paper for the GMB summarising the detailed
Sales Culture report. Paul Moore and James Davies who was leading
the SCR attended a meeting with Mr Ellis to confirm the wording
of the GMB paper.
3.27 It is standard practice across the
industry to agree the initial findings/draft reports for factual
accuracy and context prior to presenting the findings to the business
management. In the case of the CBF review these accepted protocols
were not followed when Mr Moore escalated issues to the Divisional
Chief Executive, Group Audit Committee and Group Chief Executive
prior to findings being presented to or discussed with RRR or
the Business. These briefings damaged GRR's relationship with
RRR and the business, particularly with Ms Dawson, and created
a tense atmosphere which increased the difficulty to agreeing
the review's findings.
Senior management response to issues
3.28 Following all three reviews, action
plans were drawn up and have been, or are in the process of being
actively tracked by the business to address the issues raised
and recommendations made by GRR. In addition, the recommendations
included in Appendix 1 to the PWC report are being actioned by
HBOS. We have not seen any evidence to suggest that senior management
have not responded in an appropriate manner, that actions are
not being addressed or that the Board and or FSA have not been
kept appropriately informed of the firm's progress. With respect
to the three reviews:
— Andy Hornby (Head of Retail Division)
was actively involved in the resolution and tracking of the issues
identified during the course of GRR's review of MEC and the FSA;'s
subsequent review. Executive oversight of issues arising from
Mortgage Endowment Complaints review is exercised through the
Mortgage Endowment Steering Group;
— the agreed actions arising out of
the CBF review, including a detailed customer contact exercise
to confirm customer understanding of this product, have been carried
out in accordance with the action plan. Jo Dawson as head of Advisory
Sales provided a progress report to the Retail Board and the FSA
in September 2004; and
— the issues identified and actions
to address the issues identified during the SCR are covered within
a Category 1 Project which reports regularly into the Board and
is actively sponsored by Andy Hornby as Chief Executive of the
Retail Division.
Other
3.29 Paragraph 31 of the Outline of Case
refers to an interview Mr Moore held with Jack Cullen (Head of
Risk Services, Retail) in May 2004 to discuss the culture on the
Retail Sales division. Mr Moore attached a copy of the notes of
interview to the Outline of Case. These notes were not agreed
with Mr Cullen and were not included on the HBOS files. There
is a difference in opinion regarding whether the notes are an
accurate reflection of the discussion held. Mr Cullen has stated
that some of the comments in the notes are taken out of context
and may convey a misleading impression of his views. Rather than
focus on these differences, what is important is that the context
of the discussion was taken into account when preparing the GRR
report and recommendations; and HBOS have implemented a Category
1 project to address the issues arising from the review. Hence,
we consider that the concerns raised in the noted (sic) are being
addressed.
4. APPOINTMENT
OF GROUP
RISK DIRECTOR
Background to the Group Risk Director ("GRD")
role
4.1 In autumn 2003 Mike Ellis informed James
Crosby that he wished to retire from HBOS. This acted as a catalyst
for Mr Crosby to think about his senior executive responsibilities.
He decided to split the Group Risk and Finance role. HBOS secured
Mark Tucker for the role of Group Finance Director quicker than
anticipated in April 2004. This left the position of GRD open
to be filled.
Process for identification and assessment of candidates
for the GRD role
4.2 In March 2004 the Group Management Board
("GMB") undertook their annual talent review of level
7 and 8 executives. This review identifies candidates that are
likely to emerge as GMB members in the near future. Mr Crosby
and Jackie Moore (Head of Executive and Organisational Development)
held informal discussions to see if any individuals highlighted
in the talent review were suitable for the GRD position. Ms Dawson,
David Walkden, Dan Watkins and David Fisher were identified as
such candidates. In addition Dr Andrew Smith was identified as
someone with the right technical skills and knowledge. Mr Moore
was not identified as a candidate.
4.3 Mr Crosby and Ms Moore decided to adopt
a structured process using an external provider to identify the
competencies required for the role and assess potential internal
and external candidates.
4.4 Between April and May 2004 Mr Crosby
discussed the GRD role with the senior team and articulated to
them that he had considered Ms Dawson to be his strongest candidate,
although this view was not shared by all members of senior management
at the time. On 18 May, Mr Crosby informed the Nomination Committee
of the need to appoint a GRD. It should be noted that the PWC
S166 review was being performed at this time. The results of this
review would potentially influence the new job specification and
skills profile required.
4.5 In July 2004 Egon Zohnder International
("EZI") were appointed as headhunters. They held discussions
with some senior executives and non-Executive Directors to identify
the requirements and competencies for the role. During these discussions
EZI sought suggestions for suitable candidates. In parallel Mr
Crosby held discussions with the five internal candidates. Mr
Crosby also spoke to Mr Moore for his views although it appears
to be mutually agreed that Mr Moore was not a candidate.
4.6 A role competency was produced and during
August and September 2004 Ms Dawson and other internal candidates
were interviewed by EZI for this position. At this point the five
external candidates were excluded. Four external candidates were
considered not to be as compelling as the internal candidates
when consideration of the cost of the recruit or the time candidates
would take to get up to speed with the HBOS were taken into account.
A fifth candidate was excluded as he was deemed to be conflicted
from the position.
4.7 EZI confirmed the competencies required
for the role in a telephone call with Mr Crosby in mid September.
After undertaking screening interviews EZI then produced a report
mapping the candidates onto a competency matrix. The matrix was
supported by a one-page summary for each individual. These summaries
provided: a synopsis of the individual's career; EZI's analysis
of their capability for the role; EZI's assessment of their competencies
against the role target; and, an assessment of their potential.
Ms Dawson was identified as the clear lead candidate with the
EZI report highlighting that she was a high achiever and supremely
capable intellectually. It also noted some development needs concerning
her abrasiveness and inflexibility noting that she lacked warmth.
In conclusion it noted that no one at HBOS would be surprised
to see her appointed to this role.
4.8 Ms Moore and Mr Crosby discussed the
EZI findings and concluded that Ms Dawson was the lead candidate.
Ultimately it is Mr Crosby who made the final decision to appoint
Ms Dawson as GRD. The Nominations Committee were kept informed.
It was decided that this position would be announced as part of
the larger reshuffle which was announced in November 2004. In
our view the process for the identification and assessment of
candidates for the GRD position and appointment of Ms Dawson appears
appropriate.
Appointment of Ms Dawson
4.9 At paragraph 3, which is further explained
at paragraphs 53 to 56, the Outline of Case raises issues concerning
whether Ms Dawson should undertake the GRD role. We consider below
each of the issues raised:
(a) Lack of technical skills
4.10 KPMG does not believe that the GRD
necessarily needs to have strong technical competencies in the
wide range of HBOS generic risk categories (eg Market, Credit
Insurance, Operations, regulatory, Liquidity, Interest Rates),
especially if they are supported by individuals with the appropriate
technical skills. This is consistent with Chapter 10 of the FSA's
Supervision Manual concerning Approved Persons which does not
prescribe the particular skills an individual undertaking a CF10
role is required to possess. It is key that the GRD recognises
that technical skills are important and is willing to either be
briefed or have an ability/willingness to educate themselves.
They must recognise that the rules and principles need to be adopted
in spirit and be able to convince management that a strict interpretation
of the FSA's Rules is not sufficient. Ms Dawson recognises that
she will need technical assistance, either from external or internal
advisers.
4.11 A number of individual Executives and
non-Executives have also expressed the view that the GRR needs
strong communication and relationship skills supported by the
technical expertise of direct reports.
(b) Ms Dawson's attitude
4.12 The Outline of Case expresses concern
regarding Jo Dawson's attitude to controlling risk and eliminating
activities that run counter to the regulatory regime. In particular
paragraph 28 states "Ms Dawson and her team made clear their
resistance to responding positively and appropriately to matters
of non-compliance raised by GRR".
4.13 As stated at paragraph 3.28, action
plans were drawn up and actively tracked by the business in respect
of all three reviews. Ms Dawson was centrally involved in the
CBF follow-up during summer 2004. We have not seen any evidence
to suggest that senior management have not responded in an appropriate
manner, that actions are not being addressed or that the Board
and/or FSA have not been kept appropriately informed of the firm's
progress. Our assessment of the evidence in the CBF follow-up
action does not support the assertion made by Mr Moore.
(c) threatening behaviour
4.14 Paragraph 54 of the Outline of Case
refers to threats made by Ms Dawson to Mr Moore at a meeting on
30 July. It is clear that Ms Dawson was frustrated by Mr Moore's
escalation of issues arising from the CBF review to the Divisional
Chief Executive. Group Audit Committee and Group Chief Executive
prior to discussing the findings with the business. These frustrations
were apparent in meetings held on 24 March, 26 May and the July
Meeting referred to by Mr Moore. Ms Dawson accepts that her language,
on occasion, is robust and she does not preclude the possibility
that she swore at Mr Moore.
4.15 Ms Dawson raised her concerns more
formally in two particular emails dated 28 May and 4 June. It
is not clear why Ms Dawson waited until the end of May and early
June ie after GRR (21 April) and FSA reports (28 May) had been
issued to express her concerns in this way.
4.16 Aspects of Ms Dawson's character were
highlighted by EZI when the appointment decision was being made.
In their assessment of Ms Dawson they stated: "Jo's absolute
drive to succeed can make her demanding to work for and her tendency
to be somewhat inflexible and a bit abrasive at times can inhibit
her ability to build deep relationships across businesses. She
has something of a track record of confrontations with HBOS and
is not a natural diplomat".
4.17 It is generally recognised by the senior
Executives that certain Ms Dawson's behaviour concerning the CBF
was not appropriate. The escalation of matters to the Division
Chief Executive Group Audit Committee and Group Chief Executive
before engaging with her would be grounds for her to become infuriated.
However, it is senior management's view, including the Group Chief
Executive, that Ms Dawson has the ability, as summarised in EZI's
analysis, to be effective in her new role.
4.18 We do not believe that the evidence
reviewed suggests that Ms Dawson is not fit and proper to undertake
the GRD role.
5. REDUNDANCY
OF THE
HEAD OF
GRR POSITION
5.1 In this section we used the word redundancy.
However we make no comment on the legal distinction between the
words redundancy and dismissal. This is a legal issue. We do not
believe that use of the term redundancy as opposed to dismissal
makes any difference to a consideration of the regulatory compliance
issues or the process followed.
5.2 At paragraph 4, which is further explained
in paragraphs 46 to 52, the Outline of Case raises issues relating
to the dismissal of Mr Moore. These paragraphs included aspects
of employment law, which are outside the scope of our review.
HBOS' redundancy policy
5.3 The HBOS Job Security Agreement dated
28 January 2003 which was extended with Union agreement on 20
November 2003 to cover the year commending 1 January 2004 establishes
the principles to be applied when dealing with potential redundancy
issues. This document states "This Agreement does not
apply to colleagues above Level 5 or those colleagues working
beyond their Normal Retirement Age ...".
5.4 Consistent with the Job Security Agreement,
HBOS have confirmed that there are no defined processes for making
positions at above Level 5 redundant. To put this in context,
during the period November 2003 to December 2004 18 individuals
at level 7 or 8 left HBOS at the Company's request and compromise
agreements were concluded with all these individuals. There are
approximately 150 people at level 7 or 8.
Factors leading to the redundancy of the Head
of GRR position
Creation of the GRD position
5.5 During the process undertaken to define
the GRD role consideration was given to the organisational structure
that should be in place below that position. It was felt that
Mr Moore could not continue as Head of GRR for two reasons which
were explained to him in a meeting with the Group Chief Executive
on 9 November 2004:
— the new organisational structure
incorporating the role of GRD would not allow Mr Moore to undertake
the role he wanted; and
— his influencing and relationships
skills did not enable him to inspire sufficient confidence in
the key stakeholders.
5.6 Whilst Ms Dawson had expressed a wish
to continue to work with Mr Moore in her role as GRD, concerns
were expressed elsewhere that this could not be possible due to
previous difficulties in the relationship. Reference was made
to occasions during 2004 when Mr Moore had stated that he could
not work with Ms Dawson.
Mr Moore's performance
5.7 Numerous negative comments have been
made regarding Mr Moore's performance in the role of Head of GRR.
Whilst his technical abilities were general recognised as strong
consistent reference has been made to Mr Moore:
— not inspiring confidence in GRR's
stakeholders;
— not having sufficiently strong influencing
and relationship skills;
— being overly verbose and full of
self-importance;
— not being on top of the detail; and
— over-stating matters in an overly
dramatic and theatrical way
5.8 In particular his behaviour on the following
occasions was highlighted:
— 16 September 2003 HD Risk control
committee—Mr Moore criticised the way the meeting was chaired.
A number of individuals considered this behaviour to be inappropriate;
— 26 May 2004 Retail Risk Control Committee—Mr
Moore was perceived as lecturing the committee in a patronising
manner and offended individuals present with the style; and
— 8 June 2004 Group Audit committees
meeting—Mr Moore expressed strong views in an overly aggressive
manner, he was emotion and not reasoned, measured or coherent.
His behaviour was described in different ways ranging from prickly
to ranting to extra-ordinary to outrageous. Mr Moore's behaviour
at this meeting was subject to a private meeting of the Audit
committee on 23 July 2004.
5.9 In addition, reference was made to a
number of private meetings that Mr Moore held with the non-Executives
in which it was felt that his approach, his behaviour and the
manner in which he escalated issues was inappropriate. In contrast
he did not have a private meeting with the Chairman of the Audit
committee until late 2004, although requests were made by the
Chairman of the Audit Committee for such a meeting to be scheduled.
Loss of confidence
5.10 It is clear that senior executives
and non-executive directors interviewed lost confidence in Mr
Moore over a period of time and for different reasons. Some individuals
expressed surprise that Mr Moore was appointed Head of GRR in
2003.
Decision to make Mr Moore redundant
5.11 Around October 2004 was decided that
Mr Moore was to be made redundant. He was informed of this decision
on 5 November 2004.
6. CONCLUSION
Initial conclusions
6.1 During 2004 Mr Moore strengthened the
GRR function through the recruitment of strong individuals and
by developing more of a team spirit within the GRR function. The
2005-06 Business Plan whilst still demonstrating areas for improvement
did build on the 2004-05 Business Plan and indicates that the
GRR function was refining the role of oversight. However, the
confusion surrounding GRR's remit and the interaction between
GRR, RRR and the Retail Business during 2004 were not dealt with.
6.2 With strong communication and relationships
between GRR. RRR and the Retail business the lack of clarity as
to GRR's remit could have been overcome. As neither of these was
present these difficulties were not addressed and were a recurring
issue throughout 2004. Whilst not specifically mentioned in the
MAP, we believe that the opportunity to deal with these issues
would naturally fall to the Head of GRR who could have taken steps
to improve the clarity of GRR's remit and its interaction with
other teams. It is apparent that relationships between GRR and
its stakeholders as described in Section 2 deteriorated during
2004. It is clear that the relationship between Mr Moore and Ms
Dawson was difficult for some time.
6.3 We consider that the structure and reporting
lines of GRR are appropriate. As noted in Section 3, throughout
2004 and at the time of our review GRR did not have formally agreed
and documented operational procedures and standards of practice
in place. This matter is being addressed.
6.4 We consider that the process adopted
for the identification and assessment of candidates for the GRD
position and appointment of Ms Dawson to be appropriate. It is
clear from EZI and Ms Dawson's own self assessment that she is
a robust character. The quality of her relationships will be a
critical success factor in her new role. However, we do not believe
that the evidence reviewed suggests that Ms Dawson is not fit
and proper to undertake the GRD role.
6.5 There are no defined processes relating
to the redundancy of positions above level 5 ie the Head of GRR
role at Level 8. We set out the facts leading to the redundancy
of this role in Section 6.
Further conclusions
6.6 You subsequently asked us to consider
whether the way in which the CBF, MEC and SCR reviews were approached,
the reaction to them and the follow up response are indicative
of a Group that takes its regulatory responsibilities seriously.
It is inevitable that the Group, because of its size and diversity
will continue to have ongoing regulatory issues that will need
to be actively addressed. However, on the basis of the limited
work we have done (as set out in the preceding sections of the
report) to meet our original scope, the evidence suggests that
the Group does understand, accept and take its regulatory responsibilities
seriously. This is supported by the findings of PWC's Skilled
Persons report.
6.7 The redundancy of any approved person
in a senior position, such as that of Head of GRR, will be of
concern to the FSA as a matter of course. Their interest in the
outcome of this project supports this view. On the basis of the
work we have done we believe that the quality of Mr Moore's relationships
with the key stakeholders, as set out in Section 2, was a key
factor in him being asked to leave the Group. We have seen no
evidence to suggest that Mr Moore's redundancy was in response
to him performing his job too well, as suggested at paragraph
5 of the Outline of Case. The FSA will form their own judgement
based on your discussions with them. However, in our view, we
believe that it is likely that if the FSA have any residual on-going
concerns arising from the issues set out in the Outline of Case
they will deal with them as part of their on-going close and continuous
supervision.
APPENDIX 1
INTERVIEWS/MEETINGS
HELD
Non-executive Directors
| Individual interviewed
| Date |
| Sir Ron Garrick | 28 January 2006
|
| Coline McConville | 7 February 2005
|
| Tony Hobson | 15 February 2005
|
| Charles Dunstone | 16 February 2005
|
| Kate Nealon | 16 February 2005
|
| Louis Sherwood | 16 February 2005
|
| John Maclean | 21 February 2005
|
| |
Executive Directors
| Individual interviewed | Date(s)
|
| Mike Ellis | 20 January 2005 & 22 February 2005
|
| Phil Hodkinson | 28 January 2005
|
| James Crosby | 14 February 2005
|
| Mark Tucker | 14 February 2005
|
| Andy Hornby | 15 February 2005
|
| |
GRR
| Individual interviewed | Date(s)
|
| Paul Moore | 19 January 2005 & 18 February 2005
|
| James Davies | 25 January 2005 & 18 February 2005
|
| Tony Brian | 26 January 2005
|
| Susannah Hammond | 3 February 2005
|
| Andy Sheppard (contractor) | 9 February 2005
|
| Andy Gordon (contractor) | 11 February 2005
|
| Richard Mais (contractor) | 18 February 2005
|
| |
Other HBOS
| Individual interviewed | Date(s)
|
| David Walkden | 3 February 2005
|
| Jack Cullen | 3 February 2005
|
| Stephen Millington | 3 February 2005
|
| Jo Dawson | 9 February 2005
|
| David Fryatt | 10 February 2005
|
| Jackie Moore | 14 February 2005
|
| Andrew Smith | 24 February 2005
|
| |
Other External
| Individual interviewed | Date(s)
|
| Kirstie Caneparo | 24 January 2005 & 11 February 2005
|
| John Elacott | 8 February 2005
|
| Guy Bainbridge | 14 February 2005
|
| |
APPENDIX 2
KEY DOCUMENTS
REVIEWED
Outline of Case and support documentation (Paul Moore Dossier)
Management Response
— Mike Ellis's response to case outlined by Paul
Moore.
— Emails between PRM and Mike Ellis regarding CBF
supervision visit and response to GRR review of CBF.
— Emails between PRM and Jo Dawson regarding GRR
review of CBF.
— Emails between PRM, JaD and Mike Ellis regarding
chronology of events surrounding CBF review—including schedule
setting out CBF chronology.
— Emails between PRM, JaD, AH and Mike Ellis regarding
rewrites of GRR Report on findings arising out of review of the
retail sales culture and systems and control.
Minutes of Committee Meetings during 2004
— Minutes of the Meetings of the Directors from
25 November 2003 to 23 November 2004.
— Minutes of the Audit Committee meetings from 9
December 2003 to 7 December 2004 and 8 June 2005.
— Minutes of the Audit Committee Private Sessions
from 9 December 2003 to 11 October 2004.
— Minutes of Business Banking Risk Control Committee
meetings: 25 November 2003 and 27 January 2004.
— Minutes of Corporate Banking Risk Control Committee
meetings from 18 November 2003 to 23 November 2004.
— Minutes of the Group Management Board meetings
from 17 November 2003 to 21 December 2004.
— Minutes of International Operations Risk Control
Committee meetings: 22 June 2004 and 26 October 2004.
— Minutes of IID Risk Control Committee meetings
from 20 November 2003 to 3 November 2004.
— Minutes of the Nomination Committee meetings from
28 October 2003 to 26 October 2004.
— Minutes of Retail Risk Control Committee meetings
from 21 November 2003 to 2 December 2004.
— Minutes of Treasury Risk Control Committee meetings
from 13 November 2003 to 10 November 2004.
— Minutes of Group Operational & Regulatory
Risk Committee meetings from 11 December 2003 to 7 October 2004.
— Minutes of Retail Board meetings from 20 November
2003 to 22 December 2004.
— Monthly Risk Reports within the Management Information
Pack for "Blue Book", from November 2003 to November
2004.
GRR papers submitted to Risk & Governance Committees during
2004
— GRR papers submitted to the Group Management Board
meetings from 17 November 2003 to 21 December 2004.
— GRR papers and Quarterly reports submitted to
Audit Committee meetings from 9 December 2003 to 7 December 2004.
— GRR papers submitted to Retail Risk Control Committees
from 5 February 2004 to 23 September 2004.
— GRR papers submitted to Treasury Risk Control
Committees from 19 February 2004 to 19 July 2004.
— GRR papers submitted to Business Banking risk
Control Committee 27 January 2004.
— GRR papers submitted to Corporate Banking Risk
Control Committee 27 January 2004, 21 September 2004, 23 November
2004.
— GRR papers submitted to International Operations
Banking Risk Control Committee 26 October 2004.
— GRR papers submitted to IID Risk Control Committee
meetings: from 13 November 2003 to 3-4 February 2004, 15 June
2004, 3 November 2004.
— Reports to Group Operational and Regulatory Risk
Committee (GORRC).
GRR Structure and Organisation
— Copy of document prepared by Paul summarising
his view of the "key achievements" of GRR in 2004: "GRR
working with their stakeholders to become A New Standard in Regulatory
Risk Management" for discussion with Mike Ellis—2 December
2004.
— Draft Memorandum of Understanding between Group
Regulatory Risk & Retail Division Regulatory Risk.
— Meeting Notes of One-on-Ones between Stephan Millington
and Susannah Hammond.
— CVs for: Paul Moore, Tony Brian, Susannah Hammond,
James Davies, David Walkden, and Dan Watkins.
— GRR Business Plans for 2004-2005: Draft presented
to GAC 09/12/2003—Final version—2005-2006.
— GRR Team Structure Charts: 31/03/04, 02/08/04,
1/11/04, 01/02/05.
— GRR Retail Plans for 2004 & 2005 and retail
division regulatory risk oversight plan for 2004 (draft).
Governance Framework
— Overview of HBOS Plc Corporate Governance—internal
structure and governance arrangements pre and post merger and
three lines of defence model.
— Revised Overview of Corporate Governance—following
internal restructuring on retirement of Divisional Chief Executive
responsible for Treasury Division.
— Board Control Manual—includes terms of reference
for Audit Committee: Risk Control Committees and various Executive
Risk Committees.
— Retail Board Control Manual—February 2003
and November 2004 version.
— Retail Division Governance framework.
— Retail Regulatory Risk structure chart.
— 2004 AGM Welcome Pack which includes a short biography
of HBOS Board members.
— 11 November email re Senior appointments at HBOS
attaching three announcements:
— An email to the HBOS Executive explaining their
new role.
— An email to "Insiders" which sets out
all aspects of the announcement.
— The "HBOS Today" edition which communicates
the changes to 65,000 colleagues across HBOS.
Documents related to s166 review of Risk Management
— PWC's s166 Report of Risk Management as at 30
April 2004.
— Table laying out s166 recommendations and management
response.
1. Email from the FSA to Tony Brian re s166 report 15.02.04.
2. Email and document re Draft Scoping document 8.02.04.
3. Meeting notes between HBOS and FSA from 16.04.04.
4. Formal requirement notice and final scope for report
28.04.04.
5. Trilateral meeting to review report 23.08.04.
6. Letter from the FSA to Mike Ellis re s166 report 23.09.04.
— Status of agreed actions arising from PWC s166
review:
— Paper to the Audit Committee 7 December.
— Recommendations and management response.
— Group Risk Committee draft ToR.
— Table of Heads of Risk in each division.
— GRR report independence of LRMS from the Business
Areas.
— Protocols on co-ordination between GIA and GRR.
FSA Arrow letters and Risk Mitigation Programmes (RMP)
— Risk Mitigation Programmes (RMP letters):
— FSA correspondence re Risk Assessment from Kirstie
Caneparo dated 13 January 2004 and response to FSA from James
Crosby dated 11 February 2004.
— FSA correspondence re Risk Assessment—HBOS
Retail Division from Kirstie Caneparo dated 1 December 2003.
— FSA correspondence re Arrow Risk Assessment: Letter
from Kirstie Caneparo dated 21 December 2004 and Group Response
to this dated 31 January 2005.
— FSA letter of 6/11/03 that prompted the GRR review
of mortgage endowment complaints.
Mortgage Endowments
— The RRR report (August 2003) into Mortgage Endowment
complaints and its terms of reference.
— Various versions of the terms of reference (Nov/Dec
2003) for the GRR review of Mortgage Endowment complaints.
— 3 drafts of the GRR review (dated 15/12; 17/12;
and 19/12—the latter being the version sent to the FSA).
— "Close out" letter dated 4/05/04 from
the FSA to Andy Hornby..
Corporate Bond Fund (CBF)
— GRR CBF Reports (Drafts 1 to 5)..
— GRR CBF—summary of 35 samples..
— Corporate Bond Fund Actions.
— FSA Corporate Bond Fund Review (27 May 05) and
meeting note (21 Apr 04).
— FSA meeting notes (13 September 2004).
— Paul Moore (HBOS) Chronology.
— Audit Committee Minutes (inc 9 March 2004, 8 June
2005).
— CBF Sales Paper (6 September 2004).
— Alarm over Bond Sales (Daily Mail Article—November
2003).
— Lloyds TSB fine (24 September 2003).
— Risk Assessment following the Lloyds TSB fine
by FSA.
— FSA action against Lloyds TSB—implications
for HBOS (Paul Jackson).
— CAG—Corporate Bond Sales (Tom Woolgrove).
— CBF Assessment (1 September 2003—Paul Jackson).
— Product information on CBF. Guaranteed Reserve
Account Halifax Collective Investment Plan.
— Moneybox Investigation.
— Numerous internal e-mails within HBOS relating
to CBF.
Sales Culture Review
— Aide Memoire on initial findings by Paul Moore
for discussion with Andy Hornby 11.06.
— Emails between Paul Moore, Mike Ellis, Andy Hornby
and Jame Davies dated 14.06.04—26.07.04, discussing rewrites
of the draft SCR report.
— Selected notes of branch visits and focus groups
output—04.07.04.
— SCR/s166 Management Programme pack.
— Paul Moore's note on meeting with Jack Cullen.
— Jack Cullen's response to Paul Moore's note.
— E&Y review of Retail Internal Controls (March).
— Chronology of events of SCR by Richard Mais.
— Main Board Report by Mike Ellis (GMB Paper).
— Branch Visit Findings—Summary by A Gordon
(Oxford Circus, 27 May 2004).
— Branch Visit Findings—Summary by A Gordon
(London BOSIS, 9 June 2004).
— Branch Visit Findings—Summary by A Clarke
(Skipton, 27 May 2004.
— Branch Visit Findings—Summary by T Townson
(Worcester Park, South London, 28 May 2004).
— Focus Group Findings—Summary (North Region
Branch Colleagues, 7 June 2004).
— Various HBOS—GRR Review Interview Notes.
Interviewees: Jo Dawson, Ray Milne, Heather Cutts, Paul Stanley,
Colin Turner, Paul Jackson..
— HBOS Sales Culture and Systems Controls Review
Document Log.
— Diary view of interviews.
— Retail Division—Sales Culture and Systems
and Controls Review Action Plan v 3.
— Retail Division—Sales Culture and Systems
and Controls Review Terms of Reference (Draft).
— Sales Culture & Risk Management Project status
report identifying key issues, dependencies and milestones.
— Retail sale culture and Risk management operational
review pack prepared for a meeting of the Programme Steering Committee
on 31.01.05 and minutes of the operational review/steering group
meeting on 31.01.05.
HR documents/HBOS Appointment Policy
— HBOS Job Security Agreement 2003 & 2004.
— HBOS Disciplinary Policy.
— HBOS Recruitment and Selection Policy.
— HBOS Performance Improvement Policy.
— HBOS HR Standards dated January 2004.
— HBOS Executive & Organisational Development—Executive
Framework 2004.
— The HBOS approach to Maximising Returns on External
Coaching.
— HBOS Level 7 & 8 Succession Planning Procedure.
— HBOS plc Annual Report & Accounts 2003 extract
on role of the Nominations Committee.
— HBOS Nominations Committee Terms of Reference.
— Executive Summary. Responsibilities of the HBOS
Chief Executive.
— Confidential Executive Profile—Paul Moore.
— Executive Performance Management—IID Paul
Moore dated 8 March 2004.
— Paul Moore: Highlights of his 360 feedback—2004
(Prepared by Jackie Moore).
— Executive Orientation—Initial Development
Discussion—Paul Moore (2004).
— Paul Moore HBOS GRR 360 Feedback 2004—General
Findings.
— Extracts from Paul Moore's personnel file.
— E-mail from Irene Brownlee to Jackie Moore dated
23 July 2004 re Paul Moore.
— E-mail from Irene Brownlee to Jackie Moore dated
1 September 2004 re Paul Moore.
— E-mail from Paul Moore to Jackie Moore dated 1
September 2004 re meeting with Paul Moore.
— E-mail from Paul Moore to Jackie Moore dated 12
October 2004 re Susannah Hammond.
— E-mail from Paul Moore to Jackie Moore dated 13
October 2004 re Susannah Hammond.
— Confidential Executive Profile—Jo Dawson.
— Appraisal—2003 Jo Dawson.
— Executive & Organisational Development report
for Jo Dawson dated March 2003.
— EZI presentation on Group Risk Director dated
4 August 2004.
— EZI presentation update on Head of Group risk
dated 15 September 2004.
— File note of conversation between Jonathan Skan
of EZI and Tony Hobson re Group Head of Risk role.
— Email from Jo Dawson to Jackie Moore re appointment
to see Jonathan Skan on 1 September 2004.
— Email from James Crosby to Dennis Stevenson and
Sir Ron Garrick re reorganisation and likelihood of Paul Moore's
departure dated 8 November 2004.
— Email from James Crosby to HBOS non-executives
re Senior Appointments at HBOS dated 11 November 2004.
— Internal memorandum from James Crosby on Organisation
announcement dated 11 November 2004.
Other documents reviewed
— Copy of notes which Andy Hornby and Phil Hodkinson
used to communicate the approach to Regulatory Risk Management
prior to Paul taking over as Head of Regulatory Risk Management:
— Internal Memorandum dated 5 April 2002.
— Paper on Risk Management Structures within the
HBOS Insurance & Investment Division.
— Management Accountability Profiles including those
for Tony Brian, James Corcoran, James Crosby, Jack Cullen, James
Davies, Jo Dawson, Mike Ellis, Phil Hodkinson, Andy Hornby, Paul
Moore, Stephen Millington and David Walkden.
— D Fryatt Paper to June Audit Committee—"Key
questions for Board Audit Committee".
— E-mails from Charles Dunstone attaching details
of RRCC minutes of 26 May and amendments thereto.
— E-mail from Dennis Stevenson to Charles Dunstone
(forwarded by CD) acknowledging CD's feedback from meeting with
PM in June.
| 
