FSA board not culpable over RBS, says Walker
The FSA board was not culpable in failing to spot the mounting problems before the failure of the Royal Bank of Scotland, according to one of the people put in charge of preparing a report into the failure of the bank.
Although Sir David Walker criticised the fact the bank’s and the FSA’s board did not know RBS’s capital position months before it collapsed, he told the Treasury select committee this morning that the FSA board was not culpable.
He said that just one of 61 issues brought to the FSA’s board in 2006 and 2007 was related to banking supervision. The rest were to do with Treating Customers Fairly, Equitable Life, pensions misselling and other conduct issues.
He said: “Given the pressure to focus on conduct issues like Treating Customers Fairly I think it is quite hard to fault the board.”
He told the MPs that the board was the “victim of the intellectual environment” that had emerged among regulators and economists which suggested banks had dealt with risk through insurance swaps and that markets are stabilising and efficient.
He said: “The international regulatory environment was a huge blight on the whole thing. I was part of it myself and it proved to be wholly wrong.”