The Financial Conduct Authority (FCA) has fined the former finance director of Bradford & Bingley (B&B) £30,000 for failing to provide the board with up-to-date information about the bank's financial position ahead of its 2008 rights issue.
Christopher Willford was B&B's finance director between October 2005 and June 2009. He received information in on 16 May 2008 indicating that B&B's financial outlook might be weaker than expected and out of line with previous forecasts.
The information indicated that bad mortgage debts, arrears and repossessions had all risen, whilst the B&B's net interest margin had fallen. The FCA said this was particularly significant as it suggested B&B could have fallen short of forecast profit for the year.
Willford was informed that money set aside against impairments had reached £35.7m, 63% of the £56.5m forecast for that year, while arrears and repossessions over the last three months had risen to 2.16% from 2.00% in March 2008, and the bank's net interest margin had fallen to 0.9%, compared to 1.06% in March 2008. In addition, underlying profit before tax accumulated between January 2008 and April 2008 was only 24.3% of the total forecast for the year.
As the bank was preparing to raise capital through a rights issue, this should have immediately been raised with B&B's board and investigated to ensure that the information provided to shareholders on 19 May was correct, the FCA said.
Tracey McDermott, FCA director of financial crime and enforcement, said: 'Willford failed to identify and investigate potentially material risks, or alert the board, at a crucial time for the firm. His conduct fell short of the FCA's standards - senior managers should expect the FCA to take action if they fail to show due skill, care and diligence.'
In its judgment, the FCA said that as finance director, Willford was responsible for escalating and investigating these issues, and ensuring material provided to shareholders on B&B's financial position was correct, it did not find that his conduct caused the failure of the rights issue, or B&B's subsequent nationalisation.
The regulator said the size of the fine reflected the length and timing of the misconduct, which took place over three days during the height of the financial crisis.
