Conservative leader David Cameron believes that the regulatory failings exposed in the FSA’s internal report can be traced back to Gordon Brown.
During Prime Minister’s Questions last week, Cameron attacked Brown for not admitting the serious failings uncovered by the report.
He said: “I know that the Prime Minister created the regulatory system but he needs to be frank about its failings. The FSA’s remarkable report says ‘The supervision of Northern Rock revealed the most significant combination of shortcomings,’ yet not a word about that from the Prime Minister.”
Cameron said the report proved that the power to rescue banks should be passed to the Bank of England. He said: “The report says ‘the FSA is short of expertise in some fundamental areas, notably prudential banking experience and financial data analysis’. Are these not the absolutely key things needed to be a regulator? Is not that why the Bank of England should be in charge of these rescues rather than the FSA?
LibDem Shadow Chancellor Vince Cable branded the FSA’s claims that adequate regulation may not have prevented Northern Rock’s collapse as a “total copout”.
He said: “It is critical that the FSA sets itself higher standards. Not only should it be alert to known dangers, but it should also investigate the impact and risk of new business practices.”