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‘FSA staff who dealt with bank risk were too junior’

Bank of England governor Mervyn King says that FSA staff who were responsible for challenging banks’ risk-taking strategies were too junior for the role.

Speaking at a Treasury select committee evidence session this week, King said: “Many of the bank chief executives that I talk to about this have themselves said that, in the past, when they have had meetings with the FSA, they have met levels of staff who are too junior to be engaged in those conversations and do not challenge the senior management in a way that they ought to be challenged.”

King said the problem will be addressed under the new Prudential Regulation Authority, which will sit under the Bank of England.

He said: “The right response to the crisis is not to say that we should have had twice as many regulators, or twice as many rules.

“The answer is to have the right kind of people super- vising and that is one of the things that we are looking at in the bank.”

Highclere Financial Services partner Alan Lakey says: “To send a junior person into any position where there is a requirement for skill, judgement and experience is pointless.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 7th March 2011 at 8:32 am

    “The right response to the crisis is not to say that we should have had twice as many regulators, or twice as many rules.”

    I don’t think Adair Turner’s reading from quite the same hymn sheeet, Mervyn. His stock solution to every regulatory failure seems to be forever to call for more of everything ~ more staff, more powers, more resources, more staff and, inevitably, more money. Just more, more, more, for which everybody else is forced to pay.

    As for “FSA staff who were responsible for challenging banks’ risk-taking strategies were too junior for the role”, one assumes this remark is intended to include Clive Briault and look what happened to him in the wake of a complete failure to discharge his responsibilities.

    And now the government has announced that the FCA will be independent of government and accountable solely to its own board ~ which manes, of course, accountable to no one but itself. So what’s going to change? Nothing at all that I can see, except. The FCA will be just the same as the FSA without responsibility for what the banks get up to.

  2. sorry too junior…..then its a systems and controls failure within the FSA. Any other company would get slaughtered by the FSA for that, there is one rule for some and another from the fsa bumholes

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