MPs say watchdog should have prevented RBS bailout
POLITICIANS have slammed the Financial Services Authority (FSA) for doing nothing during RBS’s disastrous takeover of ABN Amro, and are calling for tougher rules to prevent similar failures.
The Treasury Select Committee (TSC) said in a report today that the FSA “should and could have intervened” to block the 2007 deal that led to RBS requiring a £45bn government bailout a year later.
The committee dismissed claims by ex-FSA boss Hector Sants that the watchdog had no power to step in, adding: “We need a regulator with the self-confidence to intervene, even if it might cause some destabilisation in the short-term.”
MPs also tore into the FSA’s initial report into the collapse, which was just 298 words long when it was published in 2010, saying it exposed “serious flaws in the culture and governance of the regulator”.
The FSA will be split in two from 2013, and the MPs want the new Prudential Regulatory Authority (PRA) to be required by law to approve major bank mergers and acquisitions.
“It is crucial that the PRA takes on board an important lesson from this report – there is no substitute for the exercise of judgement,” said TSC chairman Andrew Tyrie.
The committee would also like regulators to consider greater powers to ban directors who are deemed responsible for bank failures. They expressed “considerable surprise” that only one RBS exec, global banking head Jonny Cameron, has been punished in this way.
The FSA said yesterday it “has put in place a completely new model of supervision” since the crisis.