FRC’s Stephen Haddrill might regret facing off with the Novak Djokovic of oversight

Outlook

Andrew Tyrie at the entrance to Chichester Cathedral in his picturesque constituency (Russell Sach)

Andrew Tyrie is on the warpath again. Having harried the City’s watchdogs until they decided to institute disciplinary proceedings against some of the executives who ran HBOS into the ground, he’s now after the body that is supposed to police the bank’s auditors.

The Financial Reporting Council grudgingly said it would start “preliminary enquiries” into KPMG’s auditing of HBOS in the wake of the devastating report into the bank’s failure issued by the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority.

Mr Tyrie has, however, raised an important point: those “preliminary” enquiries have an extremely narrow focus. They will consider only whether HBOS should have been classed as a “going concern” in its 2007 accounts and whether its financial statements should have paid some regard to the threats to its viability.

Mr Tyrie, by contrast, would like the FRC to take a wider look at the entirety of KPMG’s work for HBOS.

He has a point. The audits of HBOS, and for that matter RBS, and Northern Rock before either of those two, have raised important questions about whether and to what extent investors can rely on an auditor’s statements about a banking group.

If they can’t, that raises further questions. If there is no value to banking audits as they are now conducted, should we just throw in the towel or can something be done to improve the process? And if so, what?

Those are extremely important issues, and if you think about it, it’s something of a scandal that we are still having to raise them more than seven years after the events of the financial crisis.

Unfortunately, the FRC has shown little appetite for engaging in any meaningful discussion around them. Until now, it’s sat on its hands and argued that there is no case to answer over all those banking audits. Move along now, nothing to see here.

No wonder Mr Tyrie is making such a strong push for some independent oversight of the very limited work the FRC has agreed to carry out. It rather looks like that one will fall upon the shoulders of his Treasury Select Committee.

Letters have been flying back and forth between Parliament and the FRC’s headquarters on London Wall like tennis balls across a net separating Novak Djokovic and Andy Murray. Given his recent success rate, it’s probably fair to cast Mr Tyrie in the part of the top ranked Serb.

Stephen Haddrill at the FRC is a former civil servant turned trade body boss who appears to have a first-class honours degree in obduracy. It is at this point that he might like consider which is worse: doing the job he was hired to do, or spending the best part of the next five years trying to break the Tyrie serve.

If he’s set upon the latter course, perhaps the members of his board might like to have quiet word in his ear, at least if they want to avoid getting caught in the crossfire. Tennis balls can be quite painful when they hit you.