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Turner defends Sants as MP questions his future PRA role

FSA chairman Lord Turner has defended Hector Sants’ future role as chief executive of the Prudential Regulation Authority after a senior MP suggested he should consider whether or not it was right for him to take up the position.

In an interview with BBC Radio 4’s Today programme this morning, Treasury select committee member and Conservative Party vice-chairman Michael Fallon said that despite the 452 page report cataloguing a number of regulatory failures, the bank and the regulator still had questions to answer. The report itself was only published after substantial pressure from the TSC.

He attacked the fact that no-one had been held responsible for RBS’s failure. He added that it was for Sants to consider the “very good question” of whether or not he should take up the role as PRA chief executive.

Speaking later on the same programme, Turner said he backed Sants for the new role because it was when he took over the FSA that new rules around bank liquidity and capital started to be put in place.

He said: “It is important to realise until July 2007 Hector was not in charge of the key retail division which was responsible for the supervision of RBS and the other major banks. If you read the report, you will see Hector becoming chief executive of the whole FSA is the point we began to do many of the things that needed to be done.”

Sants is currently chief executive of the FSA. Proposals now going through Parliament will see the regulator abolished and replaced with the Prudential Regulation Authority and Financial Conduct Authority. Sants is set to take over the PRA when it begins operating in early 2013 while Martin Wheatley will run the FCA.

Fallon said there are “no heroes” in the story of RBS’s failure and that people will be “most annoyed” that no one has been held responsible for the bank’s failure.

He said: “Nobody has taken the wrap for a scandal which cost this country nearly £50bn. Ed Balls is now Shadow Chancellor, nobody at the FSA seems to have been sacked and the directors of RBS are free to go and be directors of other companies.”

Turner said it is very difficult to put together a legal case against senior RBS staff.

He said: “You need to prove people were fraudulent, reckless or incompetent in a way you can pin down, precisely and on a personal basis, as having led directly to the failure that occurred. But you also have to show it was criticisable and outside the bounds of reasonableness, a key phrase, at the time and not with hindsight. Our lawyers went through it and believe they did not have a case that would stand up in a court of law.”

The Government pumped £45.5bn into RBS at the height of the financial crisis, an investment now bearing a loss of £25bn. The FSA were originally reluctant to publish the report and today’s publication is the result of considerable pressure from the TSC. The committee appointed two independent peers to review all the information and produce a summary report. Turner said he “underestimated” how important it was for the public to be able to see the report to make up their own minds about what happened.


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. Lord Turner, as an IFA and no lver of the banks I have to say that my heart goes out to HSBC for buying a company that allegedly miss-sold bonds to pensioners and then gets a £10.5million fine just because it happened to own it at the time of the investigation. If the FSA can impose a fine on HSBC for something that happened before they bought the company then who the hell is Hector Sants to think he should bnot be held accountable for the virtually criminal way he and his cronies who have virtually brought an intire industry to its knees should get off lightly, sorry – with a promotion. His position is now untenable at the FSA or future PRA. He should be barred from holding any form authority in regulation again.

  2. Okay, so even if we accept that the buck for this catastrophic regulatory failure shouldn’t hit Hector Sants’ desk, what about all the other people at the FSA who ARE supposed to have been responsible, not least Sants’ predecessor John Tiner? Or will he be allowed to get off scot free?

  3. This is so typical of today’s UK. We pay public sector monopolies private sector bonuses based on failure i.e. the FSA awarded itself a £20 million bonus in the year of the banks failure. We remedy this failure by rebadging the same group, the same staff but with a new name so that they can continue to make the same mistakes. If market forces were at work these individuals would be facing charges of corporate negligence.

  4. I agree with Adair Turner
    I believe Hector will make an excellent leader of the PRATeam

  5. I believe it was Hector Sants that tried to make this FSA report into RBS secret and surely that act alone should get him and Sheila Nicholls the sack as he participated in a cover-up. It was also the responsibility of Hector Sants to investigate the situation with RBS fully and you cannot tell me that there are moral grounds to prosecute Fred Goodwin. The word reasonable is such a broad term and that’s the problem when looking at RBS that the regulator always takes a broad brush stroke approach instead of analysing the detail. Al Capone in the 1920s was not prosecuted for his many illegal activities he was prosecuted for tax evasion. You cannot tell me that Fred Goodwin did not take shortcuts you only have to look at his decision not to conduct a full due diligence test on the takeover of ABN Ambo.

    Even if you take all of that into consideration his later actions towards banks has shown considerable biased. After all how many senior managers or directors have faced disqualification or personal fines for the miss-selling scandals of structured bonds and the £9 billion worth of PPI miss-selling.

    Indeed his record does speak for itself and it shows a clear bias towards banks as a suspect he’ll be concentrating his efforts on his next well-paid job within the industry after he finishes his mission to destroy IFA’s.

  6. The FSA has damaged the financial industry!!! There are less mortgages, hardly any pensions, little investment or savings, little life insurance, the banks and insurance companies are in a fix! the paperwork has increased, the cost to the consumer has gone up! Financial advisers have been decimated. Mr H Sants should have the decency to go or be pushed out.

  7. Sants is totally unfit to hold office.

    The credibility of the FRA is already being seriously damaged.

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