The FSA has confirmed publicly that it has been carrying out an enforcement investigation into HBOS in respect of specific issues relevant to its failure during the wider financial crisis. The investigation into the firm has now concluded and the FSA has published a Final Notice detailing its findings in respect of failings of Bank of Scotland PLC (‘Bank of Scotland’), a subsidiary of the HBOS Group, in relation to its Corporate Division during the period January 2006 to December 2008. The FSA judged that the firm was guilty of very serious misconduct, which contributed to the circumstances that led to the UK government having to inject taxpayer funding into HBOS. The FSA considers that during this period, Bank of Scotland failed to comply with Principle 3 of the FSA’s Principles for Businesses. Principle 3 states: “A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems”. The severity of Bank of Scotland’s failings during this time would, under normal circumstances, be likely to warrant a very substantial financial penalty. However, because public funds have already been called on to address the consequences of Bank of Scotland’s misconduct, levying a penalty on the enlarged Group means the taxpayer would effectively pay twice for the same actions committed by the firm. Therefore, to reflect these exceptional circumstances, the FSA has not levied a fine against Bank of Scotland but has issued a public censure to ensure details of the firm’s misconduct can be viewed by all and act as a lesson in risk management failings.