David Prosser: What we need to know now about Lord Turner's embarrassing U-turn
Thursday 16 December 2010
Outlook So watch them squirm. The Financial Services Authority's most senior executives have spent the best part of a fortnightdefending theirdecisions not to take action against the Royal Bank of Scotland executives who led the bank to the brink of collapse and not to publish the report on the episode that led them to that conclusion. Yesterday, Lord Turner, the FSA's chairman, found himself unable to hold the party line any longer. Assuming that RBS can be persuaded to play ball, he promised that an edited account of the affair would be published before March.
We got there in the end. Still, the volte-face prompts a string of questions. Most obviously, why has it taken so long for the FSA to find a way round the legal impasse it has always claimed prevents publication of the RBS report? In the run-up to the announcement that it was taking no action against Sir Fred Goodwin and co, the regulator must have anticipated a fairly keen interest in the detail of its inquiries.
Second, Lord Turner now seems to be suggesting that the law would have allowed the publication of the RBS report if the bank had given its permission. RBS itself denies refusing this permission, which requires investigation. But even if Lord Turner is right, this is a bank that is 84 per cent owned by the taxpayer – that stake is managed at arm's length by UK Financial Investments, but it surely could have brought pressure to bear on RBS executives. Especially as while the account of RBS's failings during the takeover of ABN Amro and afterwards no doubt makes for embarrassing reading, those responsible for a series of disastrous misjudgements are no longer employed at the bank.
Finally, is it in the public interest for the FSA to publish only an abridged version of its report into the collapse of RBS? Having spent so many billions bailing out this bank, taxpayers surely deserve to see the complete version. Lord Turner himself appears to acknowledge that case by calling for a change in the law to exempt state-rescued banks from theconfidentiality requirement behind which the RBS report has been stuck (a reform that should now be put on the statute book as soon as possible).
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