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.”