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Treasury relied on FSA for expertise during crisis

A damning report into the Treasury’s response to the financial crisis shows a major reliance on the Financial Services Authority for expertise.

The Review of HM Treasury’s’ management response to the financial crisis highlights a series of failings around staff numbers and appropriate skills.

It reveals the team leader for Northern Rock changed three times between the run on the bank in September and nationalisation in February.

Expertise were revealed to be “thin on the ground” with most staff having merely general knowledge and facing a steep learning curve in financial matters.

The report quotes one senior official describing the reliance on the Bank of England and FSA.

He says: “Colleagues at the FSA were sometimes the only genuine experts we could draw on and fully trust. Sometimes there were misgivings about their speed and the strategic awareness of their advice, but without them we wouldn’t have coped. By and large they have provided us high quality and professional advice, and they were very collaborative in their approach.”

The report says there remain key challenges for the Treasury to build up its financial services skills.

It states that it must improve on generalists and use individuals with specific skills sets whether internally or externally.

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  • Bobby 2nd April 2012 at 12:15 pm

    Still, Hector was proud and happy with everything that happened and that’s what counts folks.

  • terry 30th March 2012 at 1:18 pm

    Not happened before. What a load of codswallop. We have recessions and crisis in the 1970s, 1980s,1990s. Why instead did they not consult those people who dealt with those issues at the Government at the time. If no one at the FSA and Treasury had the knowledge/forsight/expertise how can they keep saying IFA,s had a crystal ball and should ahve seen it coming. Buck passing comes to mind again, by those people earning megabucks to understand these things.

  • Jon T 30th March 2012 at 12:02 pm

    It’s not often I see the words “FSA” and “expertise” in the same sentence.

  • Tom Cleary 30th March 2012 at 11:53 am

    To be completely fair to the Treasury and the FSA, no-one could possibly have had an real experience of what happened as it had NEVER happened before. The level and depth of the crisis was new ground for everyone in FS. They will be teaching our children about it in schools. There is no point in looking back other than to learn from mistakes to ensure it never happens again…

  • Stuart Duncan 30th March 2012 at 11:45 am

    ….and now they are busy undermining the housing market and, consequently, the financial markets, through ill-conceived initiatives such as the Mortgage Market Review.

    I am astounded that nobody at the Treasury has spotted the disastrous changes of the past few weeeks and jumped on the crazy paranoia and consumer detriment inherent in the recent crackdown on interest-only lending.

  • Grey haired broker 30th March 2012 at 11:15 am

    So no one at the Treasury had a genuine understanding of financial matters. They relied on the experts from the FSA.
    As I suspected at the time it was the blind leading the blind.

    Surely that is rather like saying no one at lending institutions has a genuine understanding of lending.

    I could not possibly comment…………..

  • jools 30th March 2012 at 11:14 am

    so in other words.
    “the blind leading the blind”

    They may as well have asked Brucie. Securitisation availability next quarter, will it be higher or lower?
    Here they are they’re so appealing go on treasury, do your dealing.

  • Anon 30th March 2012 at 10:12 am

    And we already know that FSA were monitoring Northern Rok via their insurance team…