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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.”


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There are 38 comments at the moment, we would love to hear your opinion too.

  1. Of course the FSA is culpable. It was their job to stop this happening and they failed.

    It is shameful to see this type of weaselling around. The truth will come out and, like with the MP’s expenses, the more that those in power seek to stop it the more damaging it will be when it is finally public.

    The FSA is a disgrace.

  2. And yet the FSA expects IFA’ to know the risks of counter parties failing????

    And who decided that TCF was more important than market stability?

  3. Summed up with “… I was part of it myself”. So put another way, there is no way I am going to support the pinnig of blame on anyone as perhaps the finger could be pointed at me by another ‘enquiry’.

    Great club, but glad I am not in it – I want my father to be proud of me!!

  4. In the olden days it used to be that big, important, high paying jobs came with huge responsibility.

    If you fouled up you did the honourable thing and resigned.

    The FSA board fouls up, denies it and awards themselves a big bonus.

    I cannot express (in a way that MM will publish) the utter sickening contempt I have for these people.

  5. What else could we expect from Sir David – he is part of the old boys Banking network! Perhaps though he meant ‘the board were victims of being intellectually challenged’ ? Why bother pestering the Banks with rules, regulations & checks – they only had the ability to bring the country to its knees & did that very well.

  6. Us regulators are far too busy working out which Bank is going to give us a job to regulate!!

    It would be funny if it wasnt so serious

  7. So are they responsible for Keydata, Arch Cru, Northern Rock, Halifax, Lloyds TSB, Dunfermline Building Society and all the numerous other failures that have taken place on their watch.

    These people are Teflon coated.

    PS. Where oh where is Julian Stevens – is he on holiday today?

  8. I have never heard such aload of rubbish in my life.If they are not culpable who are? It seems if they get it wrong they are victims of “the intellectural environment” whatever that is, but if others get it wrong KeyData Cru etc then they are down on the IFA community like a ton of bricks. God I wish I was 10 years older and could get outof this godforsaken industry!!!

  9. Am I reading this right ?

    He said: “Given the pressure to focus on conduct issues like Treating Customers Fairly I think it is quite hard to fault the board.”

    Way to go FSA get you prorities right !!!

    Lets give all our attention to the red herring of TCF, lets not concern ourselfs with the collapse of the financial system of this country.

    Now lets get back to the real issues wheres that office junior with the chocy bics to dunk in my tea !!!

    Now before we wrap up this board meeting any suggestions for the XMAS do ?

  10. Well, we already know that Hector ‘Teflon Shoulders’ Sants isn’t responsible for anything untoward happening on his watch (because he told us so), yet it’s quite clear to most IFAs that Mr.Sants is the FSA’s equivalent to FIFA’s Sepp Blatter.

    But, exactly how many love children or brown-nosers does Hector have?

    We already know that Mark (oh please love me Hector, I say all the right things don’t I?)Hoban wants his babies, but Sir David Walker?

    Perhaps he’s been invited to one of Hector’s dinner parties, and has quite possibly enjoyed a ride on his chopper.

  11. At the very least, Sants, Turner and Nichol should resign.

    They are incompetent failures, and their continued presence at Canary Wharf is a disgrace

  12. Thats like saying a copper was doing his job well when asked for the time whilst right in front of his nose an armed bank robbery was taking place!

  13. You couldn’t make it up! Just one out of sixty one issues brought before the board in a two year period that included the biggest asset bubble since the Black Tulip. It’s the equivalent of the police issuing parking tickets, whilst not looking for murderers. So, now it’s the fault of the ‘intellectual environment’. I’m going to lie down.

  14. This must not be allowed to continue.
    There must be something we can do.

  15. Peter @ 3.07

    Apparently Ecuador is very nice, see you there.

  16. The biggest banking failure in our history was missed because they were working on TCF
    Well thats ok then!

    Only 3 million without jobs now due in a large part to bank failures but at least we are now treating them fairly there all out of work

    Well except the bankers onhuge bonus’s

  17. Why did anyone think otherwise?

  18. Gordon & Alistair are to blame, they took the regulation responsibilities from the Bank of England and gave them to the FSA. Like asking the Boy Scouts to police Afghanistan!

  19. Its not my fault,mister!

  20. So….. if I’m reading this right, we can get off the hook for something by claiming “it’s the fault of the intellectual environment”, we were concentrating on TCF? LOL! 🙁

  21. “Given the pressure [on the board] to focus on conduct issues like Treating Customers Fairly….”

    Pressure from where? The only authority higher than the board of the FSA is the Treasury. Yet, despite its web address, people such as Hector Sants and Mark Hoban would have us believe that the FSA is independent of the government. IT ISN’T ~ the FSA is part of the government, funded by the private sector. Trying to pretend otherwise is lying.

    Let us also acquaint ourselves with just who Sir David Walker is:-

    Sir David Alan Walker (born 31 December 1939), is a British banker and was the chairman of Morgan Stanley International. He remains a senior advisor to that firm.

    He was chairman from 1995 to 2001, and then again from 2004 to 2005.

    He had previously held the positions of Assistant Secretary at the Treasury, (1974–77), chairman of the Securities and Investments Board (1988–92), Executive Director for finance and industry at the Bank of England (1989–95), and Deputy Chairman of Lloyds TSB (1992–94). In 1994 Walker also joined the influential Washington-based financial advisory body, the Group of Thirty.

    In 2007 Walker was commissioned by the UK private equity industry to produce guidelines for disclosure and transparency in private equity.[2]

    On 9th Feb 2009 he was appointed to lead a Government enquiry into banks’ corporate governance. The appointment was criticised.

    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.” And yet, for all that, nobody at the heart of it all is or was actually culpable. Yeah, right.

    If the TSC falls for this instead of rejecting it outright for the load of mendacious tosh that it plainly is, then there really is no hope.

  22. Does this mean that if the FSA seek to admonish me for anything it is an appropriate defence to say that I had numerous other issues to deal with at the same time and therefore I am not culpable. Wait a minute most of the other issues are imposed on me by the FSA. We pay for these people not to do their jobs.

  23. I say again . Will some financial magazine (Money Marketing?) frame an advisor vote asking 1. if the FSA is fit for purpose? 2. Do they have confidence in the FSA’s impartiality in the regulation of banks & IFAs? 3.Does Hector Sants show ability in his leadership & practise? 4. Is it acceptable that the FSA is immune from accountability? 5. Is Hector Sants the right man fir the job of deputy governor of the Bank of England? 6. Should bankers be regulators (ie poacher turned gamekeeper and can they be impartial?) and many more questions that need to be asked. Go on, I dare you!!!!!!

  24. Something is very, very seriously wrongh with this world we inhabit.

    Consumers and regulators are no longer responsible for their actions. Is this the Big Society? Seems to me that we have lost all sense of personal responsibility and it’s all about noses in the trough with alibis already prepared.

    It also helps if your old mates are the ones that sit in judgement.

    Scandalous, scabrous and common practice at 25 The North Collonade

  25. “Given the pressure to focus on…..TCF…..” Who asked the FSA to come up with TCF in the first place……..nonsense dreamed up by people living in ivory towers ? TCF and many other issues were like shuffling deckchairs on the Titanic given the scale of the RBS debacle. Walker and his mates should be taken outside and shot – instead, he and his compatriots still have jobs with power and influence and a massive benefits package to boot.

    We are all so, so lucky that we had Gordon Brown to step in and save the world when disaster struck !

  26. These jokers are to regulation what Laurel and Hardy are to accident – free piano shifting.

    Reminds me of a Channel 4 programme, ‘Shameless’.

  27. I am a victim of the intellectual environment my Lord.
    Oh well that’s all right then: case dismissed old boy. See you in the club

  28. Yes ‘the pressure to focus on treating customers fairly’ was a self imposed pressure. The FSA made the TCF project up for themselves. Is Mr Walker trying to mislead the TSC by suggesting otherwise?
    These are VERY important matter sbeing treated with apparent cosy contempt and we don’t have a locus from which to lever a change. There must be a means of opening the fSA’s activities to scrutiny by people with no connection with their ‘club’ of ex bankers?

  29. brian weatherley 24th January 2012 at 4:44 pm

    A/c Captain explaining a wheels up landing. I failed in my primary role and forgot to lower the u/c because the intellectual environment was too demanding; I was talking about foreign exchange with the Cabin Staff. However, 50 % of the passengers did survive
    When is my next flight?
    Would we accept such an arrogant response !

  30. Neil F Liversidge 24th January 2012 at 4:48 pm

    I’ve just had my Compliance Consultant in for his 6-monthly visit. He tells me that the FSA is now on a new ‘Small Firm Business Risks’ crusade a la the TCF crusade which, surprise surprise, found that the massive and overwhelming majority of IFAs were TCF. Once again we are all to be ‘invited’ for interviews and/or have visits. So, with the FSA looking in the wrong direction yet again, now is probably a good time for the bankers to pull off another mega-scam. To ‘Anonymous’ above, who asks whether IFAs have confidence in the FSA, my Downing Street petition of a few years back answered that one with a resounding ‘NO’!

  31. Poor wee souls, they were so busy running up and down the country making sure all those commission hungry, nasty little IFAs’ were treating their customers fairly, they missed the bigger picture. How could it possibly be their fault?
    Now that they are going to be extra busy making sure we are all BRAW (business risk awareness workshops) my advice is to keep any money you have under the mattress, as who knows what will happen if the FSA are unable to multitask or are incapable of looking in the right direction in the first place?
    They deserve a bonus for all the stress.

  32. And no-one on the board, being spoonfed with pasteurised drivel about TCF and other nonsense, bothered to ask about the health of the banks. They should all be disqualified from holding any public post, and any public company directorship. They should also be required to repay whatever they were being paid.

    Can we not somehow breach the teflon coating?

  33. What a surprise !!

    A joke of a regulator. Let the banks fail, bring back bartering and scrap regulation !!!

  34. Terencer P O'Halloran 25th January 2012 at 10:03 am

    Ah! David Walker the champion of soft options and time wasting initiatives like TFC. I mean , how could the board of the FSA devote time to banking practices when TFC was such an important issue for that board to consider?

    And the qualifications of Sir David? who knows. A degree in HR, or marketing or even something remotely financial? And the rest of the board?

    So long as we all have our level 4; and TFC is in place the financial world will be ‘just perfect’.

    And the ‘press’ quote what the Sir Davids of this world say! Amazing.

  35. Bet they have their excuses ready for RDR failure as well. Wonder how they will get out of that one………. sorry sill me, I forgot. They dont give a monkies do they

  36. So, the cover up starts. The rationalisation of incompetence and blind arrogance.The retail market is a fraction of the size of the wholesale market. It is also a fraction of the complexity of the wholesale market. So Sir David is saying the FSA elected to concentrate on the easy aspects of the job. Sir Mervyn has already alluded to the fact that the FSA were totally out of their depth in respect of large areas of financial understanding. Great defence – I’m innocent on the grounds of incompetence.FSMA S3.—(1) The market confidence objective is: maintaining confidence in the financial system.
    Please explain to me how that objective is met when the FSA were only aware of one significant problem relating to banking over a 2 years period, immediately leading up to a catastrophic financial crash.
    If so much attention was focused on TCF, a doctrine that Lord Turner and Hector Sants have both indicated was out of control, and not a productive use of time, what was the function of both the management and the Board of Directors of the FSA.
    FSMA S7. In managing its affairs, the Authority must have regard to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to it.
    Can anyone support the conjecture that pre-occupation with one subject is a valid reason for getting so much wrong; that this is good corporate governance.
    But if the FSA are trying to wriggle off the hook, what about the Treasury.
    S10 of Schedule 1 requires that the FSA submit an annual report to the Treasury. The question therefore is whether the report was so constructed that it obscured the rank bias of the FSA’s approach to Regulation, or it was accurate, but the Treasury were either too lazy or too stupid to analyse what was going on. So a potential failure of oversight of enormous consequence. I can’t remember who was in charge of the Treasury during that period. Any enlighten me!

    As a slight aside S11 of the Schedule also requires that there be a public meeting within 3 months of the issuing of the FSA Annual Report. I have looked on their site be cannot find any mention of the Report (though the Act does not require its public issuance). I wonder if the TSC has has sight of any of these reports.
    More relevantly, I can’t see any mention of the Annual Public Meeting, nor does anything arise on Google. Can anyone enlighten me as to whether such a meeting has ever occurred, and where the meeting is generally advertised. There is a requirement for this in Schedule 1.
    So whilst Sir David may be preparing the grounds for elevation to a peerage, his comments do raise a lot of questions about the long term behaviour of the FSA and the Treasury. Surely this should be a subject for debate in the House.

  37. It seems that the regulation of banks was left to the pixies at the bottom of the garden lol

    Sorry can’t say that because the pixies would of probably done a better job than the FSA

  38. Words can not express the contempt held for Sants and his cronies… They should be forced to resign their posts now and hand regulatory supervision over to people who are at least QCF Level 4 qualified….!! A total joke of an organisation and if it were a company it would have spectacularly failed. No one can stand up for these guys anymore, unless they’re in their pockets of course….

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