* Watchdog criticised for "parking ticket" fines for banks
* PRA's Bailey shows no regret over Diamond departure
By Huw Jones
LONDON, July 18 Britain's financial watchdog drew complaints on Thursday that it had failed to prosecute enough bankers and delayed too long a report on what went wrong at HBOS, after UK taxpayers were forced to bail out several high-street lenders.
At the final meeting of the Financial Services Authority, which was relaunched with greater powers as the Financial Conduct Authority in April, one audience member said supervisors had simply doled out fines equivalent to a parking ticket.
Martin Wheatley, chief executive of the new entity, said it would soon publish the report into HBOS, which was taken over by rival Lloyds after it got into difficulties in 2008, only for Lloyds to discover billions of pounds of losses that required taxpayer money to staunch.
"It has not fallen between the cracks," Wheatley said at the final meeting of the FSA. He said individuals highlighted in the report would be given a chance to challenge the findings ahead of publication, a process that took 6-7 months with a similar report.
The Prudential Regulation Authority is also helping with the report and its chief executive Andrew Bailey, responding to repeated questioning, said the work was "well underway and at a well advanced stage". He gave no publication date.
FCA Chairman John Griffith-Jones recused himself from one board meeting when it discussed the report because he is the former head of accountants KPMG, who audited HBOS.
He said the FCA had signed a memorandum of understanding with auditors that required them to swap information with regulators and blow the whistle on breaches of rules at banks.
The HBOS report was requested by UK parliament's treasury committee, keen to see more bankers hauled over the coals for reckless behaviour that also led to RBS needing help.
Wheatley said regulators would get tougher criminal powers to curb reckless behaviour but noted the FCA had no policy of targetting high profile scalps in the industry.
"We will see a change and you can be confident that, looking forward, accountability will rest on the shoulders of senior people in financial institutions," Wheatley said.
Last year the FSA and the Bank of England were criticised for over-reaching themselves in forcing the departure of Bob Diamond as chief executive of Barclays.
On Thursday one former FSA official asked what judicial process was followed internally before taking this action.
Bailey said the FSA had found a "pattern of behaviour" at Barclays that was brought to a head by the bank's fine last year for rigging the Libor interest rate.
He signalled no regrets in the way Diamond was dealt with.
"We are very clearly committed to being a forward looking regulator with the use of judgement," said Bailey, who is also Deputy Governor of the Bank of England.