The Treasury Committee has published a report on “The FSA’s report into the failure of RBS”, in which it criticises several aspects of FSA’s supervision of RBS. Its conclusions and recommendations include:

  • FSA should have exercised its judgment with confidence and intervened earlier in RBS’s acquisition of parts of ABN AMRO;
  • FSA failed to regulate and supervise capital, liquidity and asset quality, and to analyse appropriately the risks of the ABN AMRO acquisition;
  • Government should legislate an explicit requirement for the Prudential Regulation Authority (PRA) to approve major bank mergers and acquisitions;
  • regulators should plan to improve the effectiveness of the enforcement regime against persons who are accountable for important regulatory failures;
  • Government should consult on banning directors of failed banks from working in other regulated industries and subjecting them to strict liability;
  • in refusing to publish its report originally, FSA showed misunderstanding of its duty to account for its actions to the public; and
  • the Bank of England’s belated review of its role in the crisis is not sufficiently comprehensive.

(Source: FSA Should and Could Have Intervened in RBS Takeover of ABN AMRO)