FSA’s Turner: Banks need special laws

CHAIR of the Financial Services Authority (FSA) Lord Turner yesterday called for the British banking system to be subject to a special set of rules and said that directors of banks that had to be bailed out should be banned from serving on the board of other banks in future.

He also defended the FSA against criticisms that it is unnecessarily secretive, refusing, for example, to publish any summary of the evidence or rationale for its decision not to censure former RBS boss Sir Fred Goodwin for his actions.

He added that since the FSA did not even compile a summary of its decison, “there is, therefore, no one report which could be published”.

On the banking system he said that banks should be subject to a special set of rules to prevent excessive risk-taking: “In some other sectors we want bold risk-taking, which might sometimes result in failure, shareholder loss or even the danger of bankruptcy. But banking is different.”

He suggested that it should in future be the role of regulators to prevent risky ventures such as RBS’s acquisition of ABN Amro.

Simon Morris of City law firm CMS Cameron McKenna said in response to Turner’s remarks: “The UK is already unique in having rules that micro-manage senior management. Any further ratcheting will only make the UK an even less attractive place to do business.”

Turner’s comments come as EU officials meet in London today in order to sign off on new international restrictions regarding bankers’ bonus payments.

Regarding proposals to shake up UK and European regulatory structures, Conservative MP Mark Field said: “It doesn’t look as though the new all-singing, all-dancing bodies that are being created will necessarily lead to a direct line of regulatory responsibility.”