The FSA published a one page statement on concluding its investigation into the failures of RBS in December 2010, which found no grounds to take regulatory against RBS senior management, including former chief executive Sir Fred Goodwin.
The statement alluded to “bad decisions”, referring to the bank’s 2008 acquistion of ABN Amro, but found there was not a “lack of integrity”.
A year later, and after much political pressure to publish a more comprehensive report, the FSA said it had a significant part to play in RBS’ near collapse in 2008.
Appearing before the Treasury select committee yesterday afternoon, Turner (pictured) admitted issuing the brief statement in December 2010 was the wrong decision.
Chairman of the commitee Andrew Tyrie commented that Sir David Walker, who helped prepare the 2011 report, told MPs that the FSA’s original decison to publish a one page statement was “driven by a desire to say no more than you absolutely had to”.
He asked: “Is that not a reflection of how cut off the FSA had become, and indeed has become?”
Turner replied that the normal procedure when the FSA decides not to bring enforcement action is not to make any statement at all. He said he now wishes he and the regulator had realised that a public accountability report was merited.
He said: “We felt that we had to comment. Given that people had speculated there was almost certainly something going on by way of an enforcement investigation into RBS we felt we had to say that it had reached a conclusion. But I entirely accept we were sticking to the existing procedures and not being imaginative enough in realising that this would require a wider public accountability report. That was a mistake.”
FSA chief executive Hector Sants called for changes to regulatory powers so that in future the regulator could intervene where it sees senior management making mistakes on the scale that happened at RBS.
Sants said: “The substance of the report is to make clear that we considered the board and the senior executives of RBS, which includes Goodwin, made a series of very poor decisions which led to the bank failing.
“Going forward we should change the regulatory regime to allow the regulator to take those sort of assessments into account to ensure that people that make those sorts of serial misjudgements are not allowed to run financial institutions again. I entirely support Parliament making changes to the regulatory framework so that we can stop people like this working again.”