FSA to publish limited RBS report

The FSA has been criticised for not releasing its report into what went wrong at RBS

Royal Bank of Scotland (RBS) has blocked the Financial Services Authority (FSA) from publishing its study into the bank’s near-collapse.

The regulator wants to publish a report by March, but needs the bank’s consent, FSA chair Lord Adair Turner has said.

In a letter to MP Andrew Tyrie, chair of the Treasury committee, Lord Turner described the situation as “extremely unsatisfactory”.

The FSA found RBS guilty of poor decisions, but not any actual offences.

The FSA investigation follows the near-collapse of RBS, which was saved only after the government stepped in with a rescue package that has left the taxpayer owning 84% of the bank.

According to Lord Turner, the financial services regulator is only legally able to make a unilateral decision to publish the details of its investigation if enforcement action is to be taken against the culpable party.

Otherwise, the permission of all the parties is involved, and “RBS has made it plain that it does not wish to provide consent”, he said.

The FSA accused RBS executives of poor judgment in connection with the acquisition of Dutch bank ABN Amro, which left the UK bank severely undercapitalised going into the 2008 financial crisis.

Lord Turner made clear that he wanted to publish a “lessons learned” report, drawing on the regulator’s investigation files, that would explain the failures by the FSA and by RBS management that led to the bank’s rescue by the Treasury.

Such a report would not include the full information gathered during the regulator’s investigation, and would not be a “detailed blow-by-blow account” he said.

For this reason, Lord Turner expressed his hope that RBS would relent and give its permission to publish the report, and he called for the committee and the government to publicly support this position.

Lord Turner also said that the watchdog wants to change the rules so that reports can be made public without other parties’ consent in similar cases in the future, because of the legitimate public interest involved.

“We believe we have already publicly argued that this legal regime is inappropriate in instances where a bank has been resolved or has been rescued to prevent failure (as was the case with RBS),” he said.

He noted in his written response to the MP that “a number of other enquiries are still at various stages of progress and subject to confidentiality constraints”.

The FSA is currently conducting an investigation into HBOS.

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