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FSA: Our focus on RDR and TCF meant bank failings were missed

The FSA has admitted its focus on conduct issues like the RDR and treating customers fairly in the run up to the crisis meant the prudential supervision of banks was sometimes regarded as a low priority.

In a report, published today, the FSA admitted it had failed in its supervision of RBS in the run up to its near collapse in 2008.

It also says its focus on the RDR, TCF and Equitable Life meant it was sometimes unable to supervise banks as effectively as it should have.

The report says: “Much of the attention of the FSA board in the pre-crisis period, as of senior executives, was devoted to considering a number of major legacy and current conduct issues that required focus – such as Equitable Life, the Retail Distribution Review and TCF. Attention was also devoted to issues relating to the development of consumer financial capability.

“This reflected the wide spread of the FSA’s responsibilities which, as stressed elsewhere in this report, increased the danger that prudential issues would be accorded low priority in periods when economic and financial stability conditions appeared to be benign.”


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There are 56 comments at the moment, we would love to hear your opinion too.

  1. So this was risk based regulation.

    Risk to consumers posed by IFAs’ a few million quid tops. The risk to the system posed by the banks, billions.

    The muppets at the top of the FSA were so busy doing RDR they could not see the big picture. And on the back of this monumental screw up Hector Sants gets a new job. Classic!

  2. Nice to see they have their priorities in order

  3. Oh! So that’s alright then! Now we understand. It was all to do with work load – poor dears!
    Wo-betide the IFA who didn’t cover every base for which they were authorised whilst advising, researching, establishing business, maintaining clients service, etc etc whilst also studying for exams and formalising client relationship to meet the requirements of FSA imposed RDR and TCF. If we ‘failed’ in this way we would be de-registered and kicked out. Happy Christmas!

  4. I have often said that the FSA were obsessing over minor issues like font sizes while the important stuff was neglected (aka fiddling as Rome burned) and they are still making the same mistakes. They are totally ignoring non-advised sales through banks and the internet (at the risk of major consumer detriment) whilst redefining mortgage fraud so that they can big it up as a major risk. My own red tape has rocketted yet again whilst the Banks are left to carry on almost as before and even worse in some ways!

  5. They took the easy route. They were lazy.

    Not only this, they were incompetent.

    They have admitted this.

    What is done about it?

  6. It might be a good idea if all IFA’s send a copy of this article to the TSC chair and ask him to call the FSA to account,make heads roll and stop the RDR

  7. ……what’s changed?
    Does this mean the FSA will now scrap RDR and re-focus their efforts on the poor advice given by banks and their non-compliant sales tactics?

  8. Frightening, truly, truly frightening.

    So, in addition to the stupidly high costs of TCF and RDR (not that I would quarrel with the aims of either), we now know what we had always suspected, that we can lay a good proportion of the blame, and the consequent costs, at the door of the buffoons at the top of the FSA!


    Oh! and thanks Dave, for doing your best last week to protect this lot from the marauding and evil EU and their ‘restrictive’ regulations!

  9. And if I makeerrors because I am focused on something else do I get to shrug my shouldwers and walk away – absolutely NOT. Time thas crowd of monkies were taken to task and treated the way they treat us, then jail the lot fo life.

  10. jeremy stuart-cox 12th December 2011 at 1:34 pm

    how does a regulator which cannot identify the major risks within its jurisdiction and regulate more than one area at a time justify its existence?

  11. So tell me, will the FSA be fined. I doubt it. If that was any IFA company operating like the FSA our heads would roll! Double standards yet again. Perhaps the public sector should stop marching for a pay rise and start marching to protect their income tax payments or will that go over their heads tooi!

  12. The FSA where so busy with TCF and RDR that they failed to notice Northern Rock go into public ownership in September 2007? Surely this alone should have promted a review of the financial position of the banks? RBS followed Northern Rock 13 months later in October 2008 and it appears still nothing was done.

    The FSA need regulating themselves, they are supposed to be regulating the large financial institutions which have the capacity to bring this country to it’s financial knees – if they haven’t achieved this already.

    They need to get their priorities in order! Which was more important – the financial stability of the country or RDR , TCF and Equitable Life? Answers on a postage stamp please

  13. Pity with all the focus on RDR and with only a year to go that the FSA hasn’t actually finalised all the rules on that yet!

  14. Oh…I suppose we will be able to impose a HEFTY FINE on the FSA for their incompetence and indeed negligence. This,of course, will be rebated to IFA’s.
    Thought not!
    Just who is regulating the Rogulator?

  15. A Near Collapse of the Whole Financial Sector or Making sure customers are forced to pay fees……….Lost for words.

    Mr Sants i believe its time you paid up and left

  16. It is not beyond the realms of possibility that RBS directors may still be the subject of legal proceedings, most certainly there should be other names added to that list.
    RDR, TCF – nice to have – regulation of the banks – have to have!
    This must be criminally negligent!

  17. Ok then own up, who had the bet that the IFA industry would get blame again?

    The arrogance is unbelievable.

    The IFA industry is to blame for the banking crisis in the UK? If they weren’t having to “regulate” us, they would have been able to “regulate” the banks.

    1) No one asked us for RDR, they mis selling of endowments was years ago.

    2) PPI was sold by banks and credit cards providers

    3) TCF is a joke which has resulted in more paperwork than direct benefits to consumers. People have had to spend time and resource to evidence that they were treating customers fairly, when all the time the customers saw no change.
    Mention TCF to a bank or insurance company employee they would not care one bit about the principals.This is because a whole department would be able to produce paperwork that would satisfy the FSA’s “oversight”.

  18. As usual, lots of vocal agreement and written statements acknowledging that the FSA where again incompetent. But do IFA’s really care? We have been trodden on, kicked whilst down and now in intensive care. Any witnesses to the assault No.
    Did anybody hear anything No.
    If you really are concerned for your clients and your business then for once act collectively and send your witness comments about the FSA to the TSC
    The TSC had two fingers proverbially raised at them as well you know. Time to stand up to bullies.

  19. How nice of the FSA to admit it made mistakes. Under their own rules they would be liable to compensate those who lost out as a result of their errors.

    Sadly as we know they do not apply the same rules to themselves as those they judge.

    Is it not strange how all those who have failed us over the last decade or from our are MP’s, to the Bank of England, yet they still get paid and suffer little or no loss for their mistakes.

    Time we had some accountability and responsibility from those who choose to judge, or rule over others. If we do not have that then this will happen time and time again.

  20. Wouldn’t it be a good idea for all IFAs to send
    this (and many other comments) to their MPs? At least then they would have to give us an answer, and it’s just possible they don’t realise what is going on…

  21. This makes me scream inside. The banks will always be untouchable. Its really easy to bully the small boys. There seems to be a trend that where a bank/building society is implicated no one can be bought to justice due to evidence.

    Just a thought. Will all the staff at the FSA be applying to the new regulator for positions all is that just a given that they just turn up business as usual.

  22. As an IFA who writes his reports in the correct fonts, using the FSA approved paragraphs, who has taken at my expense all of the exams the FSA have required this article makes me SO angry that I might just drive down to Canary Wharf and have a go in one of their new improved lifts, and having had a drink from there nice new China, I might just go say something I’ll regret-or not!

  23. This is like groundhog day! The FSA wake up (read don’t wake up) each day, regulate the small, honest, IFAs who have built up a caring, long term mutually rewarding & professional relationship with their clients to impose the draconian RDR on them. If this report isn’t proof of a biased and flawed regulator which turned a blind eye to the greedy excesses and usury nature of the banks, I don’t know what is!!! HECTOR SANTS AND HIS PERSONAL INSTRUMENT – THE FSA, has and is steadfastly using his & it’s regulatory powers to push the cannon fodder (read, IFA clients / ordinary individuals) into the exploiting arms of the banks.
    In ‘groundhog day’ the main character learnt how to make the next day better, learnt from his mistakes but Hector and his army of minions don’t and continue to try to regulate the IFA out of existence and strengthen the grip of the banks. Hector – its a new day, wake up, resign and as a parting shot, stop the click, scrap this current senseless ill advised regulation and re-commission research into a proper system of fair regulation.

  24. So Jeremy Clarkson gets in trouble for mentioning that civil servants should be shot. If he’d just said the cretins at the FSA, everyone would have agreed with him and cheered. The whole system is corrupt, the banks, whose offices are next door the the FSA get away with murder while IFA’s, who are an easy target, get fined for wiping their nose if the winds in the wrong direction!! Sants, Mugabe, Blatter, not sure who is worse.

  25. Just about had enough 12th December 2011 at 2:28 pm

    Let’s not lose sight of the fact that all this happened on Gordon Brown’s watch. Despite the failings of the FSA it was GB who wanted the light touch approach in the banking sector. All he could see was the growth in GDP from the financial sector – the jobs and taxes it brought in to fuel his unsustainable public spending agenda.

    The FSA made a big doo-doo in it’s role to regulate the banks properly but Brown was pulling the strings!

    God forbid we get another labor government in the next 20 years!

  26. Like all quangos, they take the money and go for the easy options like TCF making themselves LOOK busy to avoid someone asking what they were doing. They swept floors that didnt need sweeping. Anyone who has been in industry any amount of time knew TCF was a crock of wasted paper and time and kept unproductive people in work. The real villains were the FSA not just the banks such as RBS. The FSA couldnt get out of London for a day to visit Northern Rock and their 125%+ mortgage offerings?????? Tiner Sants Goodwin, Brown and Turner are the TRUE incompetents along with their yes men. Sants and Turner are still somehow in place. WHY?

  27. Typical behaviour from an incompetent regulator;
    Pluck the low hanging fruit, leaving the really important stuff unattended to, with such devastation to a whole economy.

    So you have nincompoops like la Cole’s inept labelling of investments as ‘toxic’, with the consequential fall out in that sector, whilst the issues that demanded some degree of inltellect to deal with, are left unattended.

    There are really no words to describe the utter contempt you policymakers at canary towers are held in. Hang your head in shame, sants, nicholls, cole.

  28. Like a celebrity junkie, all that’s needed is a few weeks in rehab, a statement from Max Clifford and it will be business as usual in no time at the FSA. They’ve already taken the first step to absolution by admitting they made mistakes. Shame all IFAs are treated like criminals and are not allowed to take such steps.

  29. What the heck has Equitable LIfe got to do with it? It closed to new biz in late 2000, The Penrose Report compelted in 2004. After that it was only the Parliamentary Ombudsman, who said there had been “comprehensive failure” by FSA, DTI etc… no change there then.

  30. Men just can’t multi task can they?

    (Blows on nicely filed nails)

  31. Now what is that saying “any excuse is better that none” It is little wonder that the FSA needs immunity from legal action against it!

  32. I have said it before and I am sorry to say I am absolutely certain I will have to say it many times in the future. RESIGN NOW SANTS.

    Also isn’t time we got together and signed up to get absolutely questions asked about getting rid of the clowns, baboons and morons at the FSA before they can get to sit in their new seats at the even more powerful regulator.

  33. 12 Dec 2011 3:08 pm
    I’m with you on that. We need to get up a head of steam and declare ‘no confidence’ in the regulator.
    FINANCIAL PRESS take note: please organise such a vote and see what the IFA community feel about their regulator eg.
    1) do you think the FSA / FCA are competent?
    2) Do you have confidence in their impartibility in regulating banks and IFAs fairly. etc…
    There are many questions to be answered. It would make interesting reading.

  34. In 10 years time, the FCA will be saying “It wasn’t me guv it was the FSA”
    Never mind, at least the TSC will hopefully realise we were not exaggerating the fact that we were OVER regulated whilst the banks enjoyed complete freedom to run amok.
    The whole point of TCF & RDR is to get rid of all those nasty, greedy, commission hungry, crooked little IFAs, so that respectable outfits like banks and building societies, decent places, where ex regulators can work, can offer a safe haven to all investors who have been so badly treated by said IFAs’
    SEND Sants homeward to think again.

  35. Re Mike @ 3.25

    No & No
    Julian Stevens Simon Mansell or Adviser Alliance
    will you please organise some sort of petition or peaceful protest from IFAs’ against this monster of a regulator who has no place in a so called Democracy.

  36. The antics of the FSA, can surely leave no one in any doubt that it is a thoroughly corrupt fraudulent organisation. When in opposition, the Tories said they were unfit for purpose, yet when they came to power, they did very little about its culture of incompetence and failure.

  37. This just defies belief. On one hand I applaud the FSA for coming out and admitting this stuff, but then I think about it a bit more and the anger takes over. I have just studied for the R01 exam, a syllabus in which the FSA preaches about its precious Prudential rules, and the heirachy of risk regulation needs. They have clearly got the Accredited exam bodies to extoll the vitues of this crap, and instantly disregarded the content within their futile, pathetic existance. The culprits should be hung, drawn and quartered over this appalling saga….

  38. So you have no one else to blame but yourself. Look again at RDR before you have another cock up on your hands !!!

  39. I know it’s not funny, but it made me smile that we’re invited, by Money Marketing, after each comment on here, to report anything that’s “unsuitable or offensive”.

    That’ll be the FSA then……………

  40. And in this same year the FSA awarded their diligent staff £20.6 million in bonuses along with good salaries, a final salary pension scheme whilst sitting in the most expensive offices in London- Well done the FSA what a bunch!

  41. It strikes me that one thing the FSA could do better is listen! By that I actually mean listen and take notice to what professionals in the industry are saying as opposed to arrogantly ignoring all comments in what comes across as a ‘holier than thou’ fashion.

    The FSA will say they listen to ‘stakeholders’ but it is just a pretense. All comments, unless approving are it seems immediately discounted as inappropriate and being from a self-interested party and as such, they have no value.

    It’s disgraceful. There is not one instance I can recall where the FSA has reacted positively or taken real steps to address external feedback or comment.

    Private industry spends millions every year finding out what their ‘stakeholders’ and consumers think. Yet the FSA ignores it all even when it is gratis!

  42. If Sants or Turner had an ounce of decency they would resign. perhaps its all that COMMON PURPOSE training of their staff that we have paid for….. Lead beyond your Authority… time for the IFA community to join a lawful rebelion. Money Marketing if you take this post off your site I will know that you are a graduate of CP, what I find amazing is that Julie Middleton and Lord Bell of Common Purpose are sitting on the Phone hacking enquiry, so that they can sensure the freedom of the press even more….. COMMON PURPOSE a none political charity. Yeah right!!!

  43. In the grand scale of things, TCF and RDR with its ban on commission in favour of adviser charging will have miniscule effect and yet the FSA had been putting most effort in driving this forward. So they have a board that drives forward with full steam on the irrelevant things and leaves the potentially (whichh turned out more than potential) catestrophic things alone. At one of the TSC meetings with FSA a member asked Hector Sants if he had been reckless in any of his dealings. He then defined reckless as doing something that is incredibly stupid, knowing it is incredibly stupid. The answer of course was No. Well if this debacle of leaving the banks alone while focusing on the smaller things is not a text book definition of reckless I dont know what. Mr Sants if you were dealing with a firm who said sorry I took my off off the advising my guys were doing while I concentrated on keeping my building looking pretty, I would love to see what the headlines in the press would have been. Not only is FSA not fit fpr purpose but you personally are unfit for purpose. Get out out, stay out and dont come back into tghe world of regulation. It is beyond your skill set to do this in a fit and proper manner.

  44. It wouldn’t be so, so bad if RDR and TCF were worthy objectives. TCF is just about reams of form-filling a la civil service non-jobs, and RDR is the result of a completely ill-conceived, ideological agenda which will finish up isolating thousands from independent advice and for those that can afford it, it will cost it more.

  45. When you think about it, what this constitutes is an admission that all those complaints that the FSA has for years been focussing its firepower totally disproportionately on the IFA sector have been fully justified. Meanwhile, the Banks were allowed to get away with practices for which any IFA firm would have been heavily fined or even shut down. It hasn’t been merely about TCF and the RDR. Rather, it’s been about the excessive zeal with which those two initiatives have been imposed on IFA’s but not the banks.

    Okay, so a few fines and restitution orders have recently been imposed over issues such as MPPI mis-selling and on Barclays for its mass mis-selling of those two Aviva funds, but not until the clamour over both had reached such levels that it simply couldn’t be ignored any longer.

    Let it not be forgotten that victims of Barclays’ mis-selling actually had to demonstrate outside Parliament to get the FSA finally to take some action, whilst the mis-selling of MPPI had reached positively epidemic proportions. And these weren’t matters of prudential regulation. They were matters of straightforward retail mis-selling on a grand scale, on which the FSA would almost have certainly been all over any IFA firm like a swarm of ants.

    If the issues were just TCF and the RDR then, in theory, the banks would have felt exactly the same excessive pressures as those inflicted on the IFA sector. Yet plainly they didn’t.

    So for the FSA now to be suggesting that it focussed too heavily on certain issues at the expense of others is a somewhat mendacious distraction from the fact that, in reality, it focussed its firepower far too heavily and thus totally disproportionately on the wrong SECTOR.

  46. When will the FSA incompetence ever cease,
    eg the RBS fiasco, allowing HSBC to mis sell, Arch Cru, Key Data, etc, etc.

    If Sant’s and his band of Director’s & Manager’s had any moral decency they would reduced their salary accordingly to their lack of performance and hand the money, along with their exaggerated bonuses, for use to reinburse a proportion of the public, the old, weak and vulnerable, who have lost financially due to the lack of duties carried out by the FSA.

    Like the programme on BBC2 last week concerning the American’s Banker’s & Investment so called professional’s the FSA have no scrupples and don’t feel that they are personally at fault for NOT carrying out the proper duties of their job description.

    The Staff at the FSA should hang their head in shame.

  47. I can’t help but imagine a conversation in Hector’s office some time back in 2007

    ” What is that large grey animal with the long nose and big ears over in the corner?”

    FSA minion
    ” That’s the elephant in the room Sir. If we ignore it, it will go away”

    Hector ” Well that’s OK then. Now where were we – Oh yes – Treating Customers Fairly – make this a priority minion”

    FSA minion ” Yes Sir. Right away Sir”

    In the mean time (as elephants are capable of producing copious amounts of the stuff), the elephant has left us all in the s**t

  48. Please pass these comments to the PM. C Of The E, the TSC and all parties concerned with the destruction of our livelihoods by by a bunch of incompetent ********s! The FSA has to be stopped NOW before everyone loses out!

  49. Yet again proof of an unaccountable, discredited and failed quango which thankfully is being replaced. But the biggest disgrace is those who have overseen this continued failure have been asked to continue. One has to question the decision making powers of George Osborne when he continues to support Sants and Turner, and that buffoon Hoban for that matter. In the private sector each of them would have been sacked many moons ago. Surely now this MUST happen and neither Sants and Turner be allowed to continue in the new PRA regime.


    ”In a report, published today, the FSA admitted it had failed in its supervision of RBS in the run up to its near collapse in 2008.”

    Why dont government listen, and make them accountable, and will the same thing happen when RDR fails, and consumers are left high and dry because they dont want to pay fees.

    Will they say in a few years, we took our eyes off the ball. and realise we should have allowed consumers the choice on remuneration when it came to seeking Independent Financial advice.

  51. Sants, Turner and Nicholl, have no credibility left.

    When are they going to go? Surely this fiasco known as the FSA can not go on anymore!

  52. So now they have come clean. They have been so focused on taking out the small IFA sector that completely missed the bank juggernaut coming at them with headlights on.
    Bankers work at the banks
    Change one letter for those at the FSA

  53. Skippy the Wonder Lemur 14th December 2011 at 2:57 pm



  54. So the top brass at the FSA didn’t ensure staff were properly trained or directed. As a result GB plc and (to a lesser extent) the World economy nearly failed.

    Isn’t this a resignation issue for Sants, Lord Turner and the board in general? If they are not prepared to do the decent thing, isn’t it a sacking issue, like has just happened with Swinton?

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