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The Treasury Select Committee (TSC) has published its report, ‘Review of the reports into the failure of HBOS’, calling for a review into whether the enforcement and supervisory functions of the Financial Conduct Authority (FCA) should be separated.

The TSC relies heavily on Andrew Green QC’s ‘Report into the FSA’s enforcement actions following the failure of HBOS’ (the Green Report) published in November 2015. In particular it endorses the Green Report’s findings that the regulatory regime in place at the time of HBOS’s collapse did not encourage enforcement action and further argues that its findings show that the relationship between enforcement and supervision within the FSA was “highly problematic”. The TSC argues that “the case for structural separation has merit”, stating that this would “bolster the perception of the enforcement function’s independence” and enable the regulators to “enjoy much greater clarity of their objectives”.

The Maxwellisation process has been blamed for causing much of the delay in publication of the reports into the collapse of HBOS. The TSC’s report states: “it is clear that a balance needs to be struck between the rights of those criticised and the need for the timely publication of important reviews.” Therefore, in March the TSC appointed Andrew to produce a report on Maxwellisation.  The TSC report states: “The aim of the review is to set out what the law requires and the typical problems caused by Maxwellisation. It may also attempt to establish a set of principles, or make recommendations, to help guide future financial inquiries and investigations in their use of Maxwellisation, to ensure that the process is fair and proportionate.”

Andrew was assisted in the production of his report by James Segan and Simon Pritchard.