Regulator ‘should have stopped RBS takeover’

RBS, which is now more than 80 per cent owned by the Government, had to be rescued amid the credit crunch in 2008 after being weakened by the acquisition of ABN Amro under the leadership of Sir Fred Goodwin.

In the report, the Chairman of the Treasury Select Committee, Andrew Tyrie MP, condemns “the FSA’s failed culture of box-ticking”.

The committee also calls for a comprehensive review of the Bank of England’s role in the financial crisis of 2008.

Mr Tyrie added: “A radical improvement of the Bank’s own governance is an essential part of regulatory reform.”

The report states: “In December 2010 the FSA initially felt that a 298-word statement about RBS’s failure was explanation enough.

“This reflects serious flaws in the culture and governance of the regulator. It also reflects a fundamental misunderstanding of its duty to account for its actions to the public and Parliament.”

Mr Tyrie said that Lord Turner, the FSA chairman, had subsequently admitted that he should have grasped at the time the need for more public explanation.

The committee chairman went on to praise Lord Turner’s commitment to the production of the FSA report, which had been valuable.