Recommendation 3

The Bank’s approach to due diligence in accrediting Greensill was woefully inadequate. The Bank took comfort in Greensill having raised significant funding from global investors and its activities in managing billions of pounds in lending. In doing so, the Bank has placed too much reliance on the work of others in accrediting Greensill, including Greensill’s auditors, whose work is currently being investigated by the Financial Reporting Council. The Bank has accepted much of the information provided by Greensill in its application at face value, including its statements of who Greensill would lend to. It seems clear that had the Bank been more curious and sceptical in its accreditation process, Greensill’s application would have raised many more questions. Greensill’s default rates and exposure to key clients have both been the subject of press reports prior to, and during, Greensill’s accreditation, yet the Bank did not cast its net widely enough in gathering evidence on Greensill. For example, the Bank did not make enquiries of the companies Greensill proposed to lend to under CLBILS. The Bank also did not explore what other government departments and regulators knew about Greensill – including those who were also assessing it for access to other schemes. Neither did it make any enquiries of Greensill’s credit insurers. While there was no proven fraud at the point of accreditation, several parties subsequently raised concerns about Greensill. Ultimately, the Bank’s inadequate due diligence has put public money at risk. Recommendation: The Bank should, by the end of February 2022, review its accreditation process, particularly for non-bank lenders and write to us with the results. The review should include the Bank’s approach to: • The principles applied to streamlining an accreditation process, and how post-accreditation checks seek to deal with any risks that arise as a result; • challenging and verifying information lenders provide regarding who they plan to len