Gordon Brown was drawn further into the banking crisis last night with claims that a key adviser dismissed a whistle-blower who raised fears that HBOS was taking excessive risks.

Paul Moore, the former head of risk at HBOS, said that he was fired personally by Sir James Crosby, then its chief executive, after repeatedly warning that the bank was growing too fast.

Sir James was later appointed by Mr Brown as deputy chairman of the Financial Services Authority and is an adviser to the Treasury.

Mr Brown faced demands for an investigation after Mr Moore said in a memorandum to the Treasury Select Committee that he was rebuffed by HBOS chiefs when he warned them that they were risking the finances of the bank and its customers unless they slowed down.

Mr Moore, a former partner of KPMG, was head of group regulatory risk at HBOS between 2002 and 2005. He said that his job at the time “felt a bit like being a man in a rowing boat trying to slow down an oil tanker”.

He accused the bank of “a total failure of all key aspects of corporate governance”.

He pointed the finger of blame firmly at Sir James, whom Mr Darling asked last April to review the problems in the mortgage market.

By dismissing him without good reason HBOS broke in-house rules, he said, and he was replaced by Jo Dawson, a sales manager with less experience of risk management — a “personal” appointment by Sir James against the wishes of other directors.

Mr Moore’s claims were the surprise revelation of a protracted examination by MPs of four of the bankers blamed for Britain’s financial crisis.

George Osborne, the Shadow Chancellor, said: “Paul Moore has made very serious allegations about how his warnings about the risks being run at HBOS were dismissed by the then chief executive, James Crosby. Given that, as Chancellor, Gordon Brown appointed Sir James as deputy chairman of the FSA and that as Prime Minister he relies upon him as a key economic adviser, the Government need urgently to investigate the allegations and discover the truth.”

The session, which began with apologies from Andy Hornby and Lord Stevenson of Coddenham, from HBOS, and Sir Fred Goodwin and Sir Tom McKillop, from Royal Bank of Scotland, produced little clue as to why they acted as they did, but it emerged that none had a banking qualification.

The hearing took place on another dark day for the economy, with RBS announcing that up to 2,300 jobs would be cut. Figures today are expected to show official unemployment passing two million.

The revelations from Mr Moore emerged under intense questioning from Andrew Tyrie, Conservative MP for Chichester, and George Mudie, Labour MP for Leeds East. In his memo Mr Moore said that he warned HBOS that it was growing too fast, that it was culturally indisposed to being challenged and that its sales culture was “significantly out of balance with their systems and controls”.

He said he told the board that it needed to slow down but was overruled by the finance director when he tried to get his views put in writing in the board minutes.

After being sacked he went to an employment tribunal. HBOS settled for “substantial damages”. He said in the submission: “I was subjected to a gagging order but have decided to speak out now because I believe the public interest demands it.”

The details of that agreement were unclear but Mr Moore gave an interview to the BBC in October criticising the approach to risk taken by HBOS, although he did not disclose that he had been sacked. He said in a previous interview that HBOS had been chasing sales too aggressively and with little regard for risk as early as 2002.

HBOS collapsed last year after lending too aggressively and relying too much on wholesale funding. It had to be rescued by Lloyds TSB. The two banks took £17 billion of taxpayers’ money to beef up their balance sheets and the Government now owns 43 per cent of the combined bank.

Mr Moore concluded: “Wasn’t it actually Sir James Crosby, rather than Andy Hornby [his successor], who was the original architect of the HBOS retailing strategy? Shouldn’t the committee be asking him to testify?”

Lord Stevenson emphatically denied suggestions from one of the MPs that Mr Moore had been “subject to threatening behaviour” by the bank. He rejected Mr Moore’s allegations, saying that the bank commissioned an independent study and the matter was closed to the satisfaction of the FSA.

Lloyds said: “HBOS refutes the allegations, which have no substance and no merit.” A spokesman said that Mr Moore was made redundant because of restructuring and signed a confidentiality agreement in the normal way as part of his severance terms. He said Ms Dawson was a senior banker with 20 years’ experience and her appointment was approved by all the board.

John McFall, the committee chairman, said last night that there was a possibility that Sir James could be called to appear before it. He said that he expected Lloyds to reply in detail to the allegations within the week.

Michael Fallon, the senior Tory on the committee, said that if Mr Moore’s claims were true then Sir James’s position as regulator and government adviser would be untenable.

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