HBOS

KPMG’s former chairman, John Griffith-Jones, has defended his former firm’s audit of HBOS, one of the banks which had to be rescued with taxpayer funds during the financial crisis.

Griffith-Jones, who is now chairman-designate of the Financial Conduct Authority, was facing questions from the Treasury select committee over his new role, the Scotsman reports.

‘The accounts of HBOS did bear a sense of reality. Had it been known, the accounts would have been qualified,’ Griffith-Jones told MPs.

HBOS was taken over by Lloyds in January 2009, rescued with some £12bn – the banks are now 40% owned by taxpayers.

Accountants have been criticised in various forums both during and post the crisis for giving the large banks a clean bill of health despite the underlying issues in their accounts.

Auditors of the large four firms – all of whom audit banks – were particularly slammed for lacking scepticism during their audits.

The FSA – which is being replaced by the FCA in a bid to reform regulation and bring greater scrutiny to bear on systemically significant organisations such as banks – is due to publish a report into HBOS in the middle of 2013.