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| MPs criticise Financial Services Authority over RBS | MPs criticise Financial Services Authority over RBS |
| (about 1 hour later) | |
| MPs have criticised the UK financial regulator's failings over Royal Bank of Scotland's damaging takeover of a large part of Dutch bank ABN Amro in 2007. | MPs have criticised the UK financial regulator's failings over Royal Bank of Scotland's damaging takeover of a large part of Dutch bank ABN Amro in 2007. |
| The Treasury Committee said the Financial Services Authority "should and could" have intervened. The takeover nearly led to RBS's collapse. | |
| The MPs also criticise FSA chairman Lord Turner's initial reluctance to publish a full report into RBS. | |
| In a statement, the FSA said it had put in place a new model of supervision. | In a statement, the FSA said it had put in place a new model of supervision. |
| RBS's takeover of ABN, just before the financial crisis unfolded, left the UK bank with too little capital to absorb losses, and the FSA pressed the bank to raise money through a £12bn rights issue - a move that did nothing to stop it having to be rescued by taxpayers. | |
| The committee's report, The FSA's Report Into the Failure of RBS, says that the regulator should have acted far sooner to investigate the bank's takeover of ABN and whether it was sensible. | The committee's report, The FSA's Report Into the Failure of RBS, says that the regulator should have acted far sooner to investigate the bank's takeover of ABN and whether it was sensible. |
| "The FSA should have intervened at an early stage. It should and could have intervened at a late stage, albeit with more difficulty. We need a regulator with the self-confidence to intervene, even if it might cause some destabilisation in the short-term," the report said. | "The FSA should have intervened at an early stage. It should and could have intervened at a late stage, albeit with more difficulty. We need a regulator with the self-confidence to intervene, even if it might cause some destabilisation in the short-term," the report said. |
| After RBS's rescue, the FSA conducted an internal investigation into its possible failings, but initially resisted publication of its findings. | After RBS's rescue, the FSA conducted an internal investigation into its possible failings, but initially resisted publication of its findings. |
| The MPs' report said: "In December 2010, the FSA initially felt that a 298-word statement about RBS's failure was explanation enough. This reflects serious flaws in the culture and governance of the regulator. It also reflects a fundamental misunderstanding of its duty to account for its actions to the public and Parliament." | The MPs' report said: "In December 2010, the FSA initially felt that a 298-word statement about RBS's failure was explanation enough. This reflects serious flaws in the culture and governance of the regulator. It also reflects a fundamental misunderstanding of its duty to account for its actions to the public and Parliament." |
| Public explanation | Public explanation |
| The report added: "In view of the vast amounts of public money committed to propping up RBS, Lord Turner's comment that a report into the demise of RBS 'would add little, if anything, to our understanding of what went wrong' was inadequate. | The report added: "In view of the vast amounts of public money committed to propping up RBS, Lord Turner's comment that a report into the demise of RBS 'would add little, if anything, to our understanding of what went wrong' was inadequate. |
| "He should have grasped the need for a public explanation of how that situation had arisen, something which he has subsequently acknowledged. We would not expect the new chairmen of the regulators to repeat the error." | "He should have grasped the need for a public explanation of how that situation had arisen, something which he has subsequently acknowledged. We would not expect the new chairmen of the regulators to repeat the error." |
| Andrew Tyrie, chairman of the Treasury Committee, added: "Without persistent pressure from the Treasury Committee, the FSA's report would never have been published. | Andrew Tyrie, chairman of the Treasury Committee, added: "Without persistent pressure from the Treasury Committee, the FSA's report would never have been published. |
| "Lord Turner has subsequently admitted that he should have grasped at the time the need for more public explanation. He was right to do so. His personal commitment to the production and publication of the FSA's report has been valuable. | "Lord Turner has subsequently admitted that he should have grasped at the time the need for more public explanation. He was right to do so. His personal commitment to the production and publication of the FSA's report has been valuable. |
| "We now have a comprehensive report that gives a better idea of what went wrong at both RBS and the FSA." | "We now have a comprehensive report that gives a better idea of what went wrong at both RBS and the FSA." |
| There is also criticism of the Bank of England's failure to have yet published a review of its performance during the financial crisis. The Bank has instigated three reviews, although the MPs said this had been done "belatedly". | |
| The committee's report said that although the Bank's decision to review its performance "represents some progress, it falls well short of what is required". | The committee's report said that although the Bank's decision to review its performance "represents some progress, it falls well short of what is required". |
| Delays in starting the review could limit the value of the Bank's conclusions into possible failings, it said. | |
| "Any lessons learned as a result of even these limited reviews will also only be available in a very late stage in Parliament's consideration of the Financial Services Bill," the MPs said. | |
| Mr Tyrie added: "A radical improvement of the Bank's own governance is an essential part of regulatory reform." | Mr Tyrie added: "A radical improvement of the Bank's own governance is an essential part of regulatory reform." |
| The Bank of England had no comment. | The Bank of England had no comment. |
| A FSA spokesperson said in a statement: "We welcome the committee's conclusions that the FSA's Board report into the failure of RBS is comprehensive and a valuable contribution to understanding why RBS failed. | |
| "The FSA has put in place a completely new model of supervision since the financial crisis in addition to major changes to the capital and liquidity levels firms are required to hold. We will consider the report's findings and recommendations in detail." | "The FSA has put in place a completely new model of supervision since the financial crisis in addition to major changes to the capital and liquidity levels firms are required to hold. We will consider the report's findings and recommendations in detail." |