FSA admits regulatory deficiency in RBS report

23rd Jun 2011 10:12

Lord Adair Turner, the chairman of the Financial Services Authority, has said at the watchdog's annual general meeting that a report concerning the failure of the Royal Bank of Scotland (RBS) will be released later this year.Turner revealed details of the investigation which admit that the regulator was "severely deficient" in over-seeing the bank. The report should show why the now part-nationalised lender needed a £46bn bail-out from the taxpayers and £37bn of emergency funding from the Bank of England (BoE).Shares in RBS took a hit in early trading on Thursday, and were trading nearly 3% lower at 37.53p as of 10:33am."It includes what led to failure, what our enforcement looked at and why it concluded there were no grounds for action, and an account of how it supervised RBS before the crisis," Turner said."That element will describe a deficient approach to regulation which allowed banks to operate with too little capital, our supervisory approach was inadequate, failing to focus on core issues, capital liquidity, asset liability and risk," he added.The FSA is to be abolished in 2012 - according to plans announced in June 2010 by Chancellor of the Exchequer George Osborne - and its responsibilities will be separated between the BoE and the new Financial Conduct Authority."The Government believes the current system of financial regulation is passing new legislation to strengthen and reform its structure," according to the HM Treasury website.---BC