FSA report on RBS to blame bad regulation
THE FSA’s report on the collapse of RBS will show that “the regulation was woefully inadequate” in the run-up to the financial crisis, FSA chair Lord Turner said yesterday.
“If RBS had been subject to Basel III from 2007 onwards, it would have been a completely different situation,” he said.
He added that the FSA’s report would be unvarnished because “we don’t have a record of being easy on ourselves”.
Turner also criticised the “immensely frustrating” process the body has been through in order to publish the report, saying: “We’ve have to invent a process to deal with an unsatisfactory legal situation.”
However, he said that reforms to the UK’s regulatory regime would put in place a better system for similar cases in future.
But the government’s other reforms, which involve creating two new bodies in a “twin peaks” system of regulation, came in for criticism by Adam Phillips, who chairs the FSA’s consumer panel.
He said that it is “essential” that the policy gets “a lot more work on the detail to ensure it isn’t inefficient”.
Many in the City are worried that the government’s proposal to replace the FSA with two new bodies and to add another committee to the Bank of England will lead to duplication. In a white paper finalising the new structure, the Treasury said that it would be “inappropriate” to give any more detail in primary legislation.
Louise Hodges, a partner at law firm Kingsley Napley, said that the government had set out to abolish the FSA before considering what would replace it. “There is a concern that there’s a political agenda here,” she said.
“How are these new agencies going to work together and make sure things don’t fall through the cracks or overlap and duplicate work?”