The accountancy watchdog could decide as soon as tomorrow whether to launch a formal investigation into the role of big four accountancy giant KPMG in the collapse of HBOS in 2008.
The Financial Reporting Council’s (FRC) conduct committee is set to meet tomorrow to make its decision, Sky News has reported.
The conduct committee will reportedly make a recommendation to the FRC board.
If the regulator decides not to investigate KPMG, the watchdog will publish a report detailing its reasons why, due to the high level of public interest in the HBOS case.
KPMG served as the auditor of HBOS and issued the ailing bank with a clean bill of health shortly before the bank had to be rescued by the government and Lloyds.
Late last year the Financial Conduct Authority (FCA) and the Bank of England’s prudential regulation authority recommended HBOS executives should be investigated over their role in the bank’s failure.
The FCA ruled the actions of KPMG were the remit of the FRC however, with the FCA concluding there were not grounds for an investigation into the auditor.
Andrew Tyrie MP, chairman of the Treasury Select Committee, has since sought to quiz the FRC over its decision not to launch disciplinary proceedings against KPMG.
Sky News reports one source within the FRC said it was "likely, if not inevitable" that a full probe would follow.
So far only Peter Cummings, who was head of HBOS’ corporate lending arm, has been sanctioned over the bank's downfall and was fined £500,000 and banned from the industry for life in 2011.