The Financial Reporting Council ruled that KPMG was reasonable in vouching for the health of HBOS, but “was aware” in 2007 of going concern problems at UK banks

Confidential minutes from a high-level City meeting in 2007 raise questions about the ruling this week by the Financial Reporting Council that KPMG was “reasonable” in vouching for the health of the soon-to-fail bank HBOS.

With the credit crunch in full swing, a meeting of investment chiefs and senior accounting professionals at the offices of Schroders two weeks before Christmas 2007 heard how the FRC was “fully aware that there might be ‘going concern’ problems” at UK banks.

Yet the FRC, the main regulator for UK accountancy firms, this week cleared KPMG of any failings when in February 2008 the accountants judged HBOS to have made £5.5 billion of profits and to be a going concern. The FRC ruled that market conditions at the time