Lord Adair Turner, chairman of the Financial Services Authority, has slammed the law prohibiting the regulator from publishing its investigation into the Royal Bank of Scotland.
In a letter to Andrew Tyrie, chairman of the Treasury Select Committee, Turner branded the rules “extremely unsatisfactory” and says he can only publish with RBS’ consent.
He called for an overhaul of the confidentiality rules of state-owned banks but says if RBS agrees he hopes to publish details of the probe, which cleared the bank of all wrongdoing, by March 2011.
He says: “While many of the lessons learnt in relation to the FSA’s pre-crisis supervisory approach have been described in the Northern Rock internal audit report, we believe there would be merit in describing the approach the FSA took to the supervision of a bank engaged in an aggressive takeover – an approach we have now radically changed.”
Turner hinted that as a result there might be changes made to the legislative framework so the FSA was better equipped to intervene in
He adds: “We would like to be able to produce a report which combines a review of both FSA processes and of RBS decisions.”
Tyrie says it is in the public interest to publish details of the probe and that RBS is a special case. He says: “It is crucial we learn the lessons from the catalogue of mistakes which necessitated a huge taxpayer bailout, not least for the assistance it may provide in getting regulation right for the future.”
Meanwhile, last week a US embassy cable leaked by WikiLeaks shows RBS chairman Sir Phillip Hampton believes RBS directors breached their fiduciary duties during the financial crisis. The cables also show that FSA chief executive Hector Sants was under pressure to take firmer action on Iranian banks in London.