James Moore: Schadenfreude over Coutts? No, it should be fury thanks a lot with some words

Just when you thought it was safe to go back into the City the Financial Services Authority shows that the departure of its chief enforcer, Margaret Cole, hasn't de-fanged it after all. No less an institution than Coutts was yesterday hit with an £8.75m penalty. On the face of it there is every reason to indulge in a hefty dose of schadenfreude here. Coutts is the Queen's banker, a shamelessly elitist institution that looks after top people's money. The sort of institution – former clients include Byron, Dickens and Chopin – that wouldn't look at you unless you were the right sort of person, right?

Well, not exactly. Because, as the FSA's lengthy report into Coutts' failings makes clear, the right sort of person was actually just about anyone with a big enough sack full of cash.

Coutts ran into trouble because, in the midst of an expansion drive, its bankers didn't bother to look too hard at where the riches of the wealthy fish they were trying to land actually came from, even when it classed them as "Politically Exposed Persons". These are people who are either part of, or closely linked to, regimes in parts of the world where the taint of corruption is never far away.

In one way Coutts' practices were actually rather praiseworthy. Its classification of a politically exposed person went beyond the official one to include people associated with the UK regime. Which, given the revelations about cash for access and Tory donors, seems eminently sensible.

The trouble is, it isn't much good going further than the rules require in identifying high-risk customers if you then don't bother to check them out, as with nearly three-quarters of the Coutts cases the FSA looked at. Hence the blockbuster fine, the regulator's sixth biggest to date.

Given the scale of the failings, you might think questions would now be raised about Michael Morley, the former Barclays and Merrill Lynch executive who is supposed to be running Coutts for its owner, the state-controlled Royal Bank of Scotland. However, in these situations it always seems that when things go well it is down to the executives concerned, but when things go badly there's an excuse.

As for the fine, it will ultimately be paid by Royal Bank's shareholders, which means the taxpayer. It will go towards the FSA's supervisory budget, which has been fattened by £25m in fines against RBS over the past two years. That money will do a lot to help keep fees down for other City firms that are a bit better managed. The taxpayer is once again subsidising the City.

It isn't schadenfreude we should be feeling. It's fury. Especially given that the executives running RBS keep getting handed huge bonuses despite scandals like this happening on their watch.