The Financial Conduct Authority (FCA) has fined Christopher Willford, the former finance director of Bradford & Bingley (B&B) £30,000 for failing to provide the board with up-to-date information about B&B’s financial position, including profits, mortgage arrears and re-possessions, ahead of its 2008 rights issue.
On 16 May 2008, Willford received information that suggested that B&B’s financial outlook might be weaker than expected. As B&B was preparing to raise capital through a rights issue, the FCA said this should have immediately been raised with B&B’s board and investigated to ensure that the information provided to shareholders about the rights issue on 19 May was correct.
The regulator said the information Willford received was “out of kilter” with previous forecasts, and showed that bad mortgage debts (impairments), arrears and repossessions had all risen, whilst the difference between the interest rates B&B charged to, and received from, its customers (net interest margin) had fallen. This is particularly significant as it suggested B&B could have fallen short of forecast profit for the year, the FCA said.
Tracey McDermott, the FCA’s 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.”
The FCA did not find that Willford’s conduct caused the failure of the rights issue, or B&B’s subsequent nationalisation. The size of the fine reflects the length and timing of the misconduct, which took place over three days during the height of the financial crisis.