Labour was behind failure to regulate RBS, FSA report says
Pressure from last government was partly responsible for hands-off approach, review claims
Political pressure from senior Labour politicians – including the now Shadow Chancellor Ed Balls – was partly responsible for the failure to regulate the Royal Bank of Scotland in the years leading up to the banking crash, a highly critical report concluded yesterday.
The review by the Financial Services Authority blamed deficiencies in the management and culture at RBS and called for tougher rules to make bankers more accountable. The regulator also admitted it had failed adequately to monitor and challenge the bank – but blamed the previous government for encouraging it to take a hands-off approach. It cited speeches by the former Prime Minister Gordon Brown and the then Shadow Chancellor Ed Balls backing light regulation.
In a speech in 2006 quoted in the report, Mr Balls said: "We must keep the UK's regulatory system at the cutting edge ... At all times we will apply a system of risk-based regulation, without unnecessary administration burdens... Nothing should be done to put at risk a light-touch regulatory regime." The report concludes: "In response to this focus and belief, FSA senior leaders were conscious of the need to reassure political leaders that the supervisory approach being pursued was not heavy-handed."
It added: "If senior leaders of the FSA had proposed, before the first signs of the crisis a supervisory approach which entailed higher capital and liquidity requirements, caps on bank balance-sheet growth, or intensive analysis of asset quality, it is almost certain that their proposals would have been met by complaints the FSA was pursuing a heavy-handed approach which would harm London's competitiveness."
Labour yesterday said the party was clear that they had made mistakes over banking regulation but pointed out that it was not alone in calling for light-touch regulation. It quoted a speech by David Cameron in 2008 in which he referred to Labour's "excessive bureaucratic interventionism" and "too much regulation".
The Business Secretary, Vince Cable, said yesterday he was seeking legal advice about whether any of the directors should face disqualification proceedings. The report shone a light on the poor relations between the FSA and RBS and said its chief executive Sir Fred Goodwin's "assertive" management style was flagged as a potential risk as early as 2003. RBS management was resistant to what they saw as unnecessary FSA interference.
- 1 Sabrina Corgatelli: US hunting tourist posts picture of herself with dead giraffe after Cecil the lion outrage
- 2 Tom Cruise: Reporters banned from asking actor about Scientology
- 3 A-level results 2015: UK exam board OCR admits it 'estimates' hundreds of pupils' grades after papers 'go missing'
- 4 Dutch King Willem-Alexander declares the end of the welfare state
- 5 Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
Edward Heath 'raped 12 year-old boy at Mayfair flat'
Sabrina Corgatelli: US hunting tourist posts picture of herself with dead giraffe after Cecil the lion outrage
'Gene drive': Scientists sound alarm over supercharged GM organisms which could spread in the wild and cause environmental disasters
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
Tom Cruise: Reporters banned from asking actor about Scientology
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Calais crisis: The seven claims made about the migrants - and the reality
£20000 - £22000 per annum: Recruitment Genius: This is an intermediate help de...
£15000 - £25000 per annum: Recruitment Genius: This specialist personal injury...
£20000 - £30000 per annum: Recruitment Genius: Join a fast growing, UK based I...
Negotiable: Recruitment Genius: An experienced TLO is required to manage, deli...