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Categories:Politics,Regulation

Turner: One page RBS report 'was a mistake'

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Lord-Turner.jpg

FSA chairman Lord Adair Turner has admitted it was a mistake not to initially publish a full account of the regulator’s investigation of the events that brought Royal Bank of Scotland to the brink of collapse.

The FSA published a one page statement on concluding its investigation into the failures of RBS in December 2010, which found no grounds to take regulatory against RBS senior management, including former chief executive Sir Fred Goodwin.

The statement alluded to “bad decisions”, referring to the bank’s 2008 acquistion of ABN Amro, but found there was not a “lack of integrity”.

A year later, and after much political pressure to publish a more comprehensive report, the FSA said it had a significant part to play in RBS’ near collapse in 2008.

Appearing before the Treasury select committee yesterday afternoon, Turner (pictured) admitted issuing the brief statement in December 2010 was the wrong decision.

Chairman of the commitee Andrew Tyrie commented that Sir David Walker, who helped prepare the 2011 report, told MPs that the FSA’s original decison to publish a one page statement was “driven by a desire to say no more than you absolutely had to”.

He asked: “Is that not a reflection of how cut off the FSA had become, and indeed has become?”

Turner replied that the normal procedure when the FSA decides not to bring enforcement action is not to make any statement at all. He said he now wishes he and the regulator had realised that a public accountability report was merited.

He said: “We felt that we had to comment. Given that people had speculated there was almost certainly something going on by way of an enforcement investigation into RBS we felt we had to say that it had reached a conclusion. But I entirely accept we were sticking to the existing procedures and not being imaginative enough in realising that this would require a wider public accountability report. That was a mistake.”

FSA chief executive Hector Sants called for changes to regulatory powers so that in future the regulator could intervene where it sees senior management making mistakes on the scale that happened at RBS.

Sants said: “The substance of the report is to make clear that we considered the board and the senior executives of RBS, which includes Goodwin, made a series of very poor decisions which led to the bank failing.

“Going forward we should change the regulatory regime to allow the regulator to take those sort of assessments into account to ensure that people that make those sorts of serial misjudgements are not allowed to run financial institutions again. I entirely support Parliament making changes to the regulatory framework so that we can stop people like this working again.”

 

 

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Readers' comments (21)

  • The big mistake was the FSA. It has done just about all it can to kill off IFA's but did nothing to make our banks safe. Any decent directors would resign but not those who work for a non elected dictator ship. Bring on the IFA spring

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  • Cover up for the FSA and their friends.

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  • the FSA do not proptect consumers at all. All they do is line their pockets and try to be seen as the masked advenger. The way things are going there will be no industry left

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  • Somewhat ironic that Sants wants to prevent anyone guilty of 'serial misjudgements' from running financial institutions again.

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  • Put the Bank of England back in charge quick before these muppets bugger things up again.

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  • "FSA chief executive Hector Sants called for changes to regulatory powers so that in future the regulator could intervene where it sees senior management making mistakes on the scale that happened at RBS."

    But who will intervene when the FSA's senior management is making mistakes that will decimate access to affordable independent advice??

    One rule for them....etc....

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  • Getting nervous are you Hector?

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  • Turner say's " he now wishes he and the regulator had realised that a public accountability report was merited".

    How can this mindset hindsight be fit for purpose.

    Upon the release of the FSA report into the failings of the RBS, Lord Turner appearing on the BBC news replied when asked why nobody was being “put to the sword over the RBS disaster “You need to prove people were fraudulent, reckless or incompetent in a way you can pin down, precisely and on a personal basis, as having led directly to the failure that occurred. But you also have to show it was criticisable and outside the bounds of reasonableness, a key phrase, at the time and not with hindsight. Our lawyers went through it and believe they did not have a case that would stand up in a court of law.”

    Not with hindsight eh? At least he admits that a public accountability report was merited.

    George Orwell said in Animal Farm “"Man is the only creature that consumes without producing. He does not give milk, he does not lay eggs, he is too weak to pull the plough, he cannot run fast enough to catch rabbits. Yet he is lord of all the animals. He sets them to work, he gives back to them the bare minimum that will prevent them from starving, and the rest he keeps for himself”.

    Animal Farm, Canary Wharf??????????

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  • I am Sick of being treated like a criminal as an IFA with no common law or human rights, these out of control sick people never take responsobility for their actions or inactions are not accountable to anyone, all for a common purpose... get rid of democracy and IFA's
    Things need to change rapidly!!!

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  • This is the way things work in the upper reaches of the financial and political establishment - publish a whitewash report soon after the event, put up with the inevitable brickbats which ultimately subside, and then put out a complete report several years down the road.

    In the meantime the short initial report provides handy political cover for the government of the day.

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