The former finance director of Bradford & Bingley (B&B) has agreed to pay a fine of £30,000 for failing to provide the Board with up-to-date information regarding B&B’s financial position, including profits, mortgage arrears and re-possessions, ahead of its 2008 rights issue in breach of Principle 6 of the FCA’s Statements of Principle for Approved Persons. The regulator issued a Decision Notice against Mr Willford in October 2010 with a financial penalty of £100,000.

On 16 May 2008, Mr Willford received information that suggested that B&B’s financial outlook may be weaker than expected. The FCA found that, as B&B 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 about the rights issue on 19 May was correct. Mr Willford’s failings were deemed serious because, as an experienced finance professional, Mr Willford was expected to take full account of his responsibilities for overseeing financial reporting and for advising the Board in relation to finance matters. In addition, the conduct of the rights issue was of great importance to B&B and it was therefore important that Mr Willford ensured that the Board was advised properly regarding the substance of the information he received.

In deciding the penalty, the FCA took into account that:

• relevant events occurred during a time of wider financial crisis;
• the degree of pressure on Mr Willford was exacerbated by the serious illness of B&B’s CEO during the relevant period;
• other senior individuals in the B&B finance function, who had access to the same information as Mr Willford received on 16 May 2008, also came to the conclusion that, without further investigation, it did not itself indicate a significant deterioration in B&B’s outlook; and
• Mr Willford’s failures did not result in a trading update amounting to a profits warning having to be issued by B&B on 2 June 2008, and they did not contribute to the failure of the rights issue or B&B’s subsequent nationalisation.

This marks the conclusion of a long running enforcement action which has seen a gradual reduction in the fine. In May 2010, the Regulatory Decisions Committee (the RDC) issued a Warning Notice to Mr Willford proposing to impose a penalty of £150,000. Following written and oral representations, the RDC issued a Decision Notice reducing the financial penalty to £100,000. Mr Willford brought a claim for judicial review of the October 2010 Decision Notice seeking to have it quashed on the basis that it did not contain adequate reasons for the decision. The High Court found in Mr Willford’s favour, but the regulator appealed that decision and the Court of Appeal decided in the regulator’s favour in June 2013. Mr Willford had also sought to preserve his anonymity in the context of the judicial review proceedings but the Court of Appeal declined to protect his privacy holding that, by seeking judicial review, Mr Willford had brought the matter into the public forum where the principle of open justice applies.

View FCA Final Notice: Mr Christopher Willford, 11 December 2013