FSA 'better skilled to regulate'
Monday 12 December 2011
The City regulator said today it was a different organisation to the one that failed to rein in Royal Bank of Scotland prior to its rescue.
The Financial Services Authority (FSA) admitted to its own part in RBS's downfall that led to a bail-out by the taxpayer, saying that its approach was flawed and it provided "insufficient challenge" to the bank.
It had been too focused on policing the behaviour of traders rather than supervising the overall direction banks were taking or looking at whether they were taking on too much risk, it added in today's report.
But the FSA claimed it is "a different organisation now" because it now has more resources, better skills and far greater focus on capital, liquidity and asset quality.
Its powers of supervision should be further strengthened under plans to split the regulator in two to create the Prudential Regulation Authority (PRA) to monitor the strength of the banks and the Financial Conduct Authority (FCA) to look at legal issues.
The report admitted that the regulator did not devote enough resources to examining big banks or investment banking but said its previous approach "reflected widely held, but mistaken assumptions about the stability of financial systems".
It blamed political pressure for the "light touch" regulatory regime, which had flourished under the stewardship of Gordon Brown as chancellor.
The FSA had faced "frequent political demands" to avoid imposing "unnecessary" burdens which could undermine the competitiveness of the City, it added.
The report cited a press release from the 2005 launch of Better Regulation Action Plan in which Mr Brown said: "The new model we propose is quite different. In a risk-based approach there is no inspection without justification, no form filling without justification, and no information requirements without justification."
The FSA added that its supervision team was "largely doing what was expected of it" but was "following a deficient supervisory approach" in the run-up to the bank's failure.
Geoffrey Macnab reviews The Desolation of Smaug - the meat in Peter Jackson's Hobbit sandwich
Chiwetel Ejiofor and Idris Elba get nods for Best Actor, which no black Brit has ever won
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
Swedish stars ask fans for £195 pledges on crowd-funding website
Nelson Mandela memorial: ‘Bogus’ sign language interpreter made mockery of Barack Obama’s tribute in Soweto
French café starts charging extra to rude customers
Australia: Gay marriage law reversed by high court less than a week after first weddings
Church versus state: Scientology faces unholy war after court ruling
Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- 1 Nelson Mandela memorial: ‘Bogus’ sign language interpreter made mockery of Barack Obama’s tribute in Soweto
- 2 French café starts charging extra to rude customers
- 3 Australia: Gay marriage law reversed by high court less than a week after first weddings
- 4 Not all right on the night
- 5 Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- < Previous
- Next >
iJobs Money & Business
£60000 - £100000 per annum + benefits + bonus: Harrington Starr: Senior Busine...
£500 - £550 per day: Cornwallis Elt : Business Systems, Business Analyst, Plat...
£90000 - £110000 per annum: Cornwallis Elt : Solution Architect, Credit Risk, ...
£44999 - £60001 per annum + Benefits: Pro-Recruitment Group: A Top Tier firm i...