In March 1967, the Agency embarked on a new venture as a secondary bank, taking deposits from principals and financial institutions, which it re-lent or invested in equities, gilts, property and the private sector. Unlike its traditional financial service, the new pursuits were conducted on its own account and thus became known as ‘own account activities’. The Office acted, not as an agent, which had been the case over the previous 134 years, but as a principal, reaping all the profits from the new business, but also being liable for any losses. Begun by the Senior Crown Agent, Sir Stephen Luke, and carried on by his successor, Sir Claude Hayes, the new business was very much the brainchild of Allan Challis, the Head of the Finance Directorate. Although he had worked in the Agency's finance department since leaving school, Challis had great entrepreneurial flair, and, by March 1973, the CAs' new undertaking had a capitalization of £254m (Figure 8.1).

The new venture was dogged by controversy from the start. The City was soon awash with rumours of corruption and incompetence, the press printed highly critical stories, and a series of damaging questions were asked in Parliament by Labour Party MPs and Peers. Concerned about the Office's new pursuits and wishing to finally resolve the problem of its status, the Ministry in 1972 set up an enquiry chaired by Sir Matthew Stevenson.