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FSA hopes to publish report on RBS and its own failings

The Financial Services Authority says it hopes to publish a report into the Royal Bank of Scotland board and its own failings during the bank’s collapse by March 2011 but needs the bank’s consent.

In a a letter responding to Andrew Tyrie, chairman of the Treasury Select Committee, Adair Turner, chairman of the FSA, says he will try to deliver a report to the Committee and government.

Yesterday Tyrie wrote to the FSA chariman to request some details of the investigation into RBS to be published in the public interest.

The regulator had cleared the state-owned bank of all wrongdoing after it required a government bailout but Turner says the current restrictions on not being able to publish due to legislation are “extremely unsatisfactory”.

He says: “The FSA would ideally like to be in a position to produce a publishable report. Such a report would ideally cover the lessons to be learned both from the decisions made by the RBS board and executives, and from any failings of the FSA supervisory approach in place at that time.

“While many of the lessons learned in relation to FSA pre-crisis supervisory approach have already been openly described in the Northern Rock Internal Audit report, we believe that there would be merit in describing clearly the approach that the FSA previously took then to the supervision of a bank engaged in an aggressive take-over, an approach we have now radically changed.

“There might in addition be some resulting proposals for changes in the legislative framework which would equip us better to intervene in future. We would therefore like to be able to produce a report which combines a review of both FSA processes and of RBS board and management decisions.”

The FSA has suggested delivering the report to the government and the Treasury Select Committee by the end of March.

He says it will not be a detailed blow-by-blow account, but a clear description of any key failings, whether related to FSA supervisory processes or to the decisions made by the board and executives of the bank.

He adds that it would need permission from RBS and we a number of third parties but could not publish a report on individuals.

He says: “It would not therefore allow us to put out a report on RBS, as RBS would, of course, be identified. This provision therefore can only used by us when making general statements from which it is not possible for particular firms or individuals to be identified; for example, as part of an industry wide review we may say several firms need to improve their controls.”

Turner also says that current legislation ensuring the confidentiality of state-owned banks is insufficient and should be changes.

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  • Patrick Haughton 15th December 2010 at 4:28 pm

    If this report is going to be covering the failings of the FSA itself, I suspect that it is going to be very long.

  • Kim 15th December 2010 at 3:50 pm

    The FSA dont ask permission from brokers when they name and shame them for non payment of fees! Once again the banks are running the show – appalling!