Report into RBS collapse lets culprits dodge punishment

THE FINANCIAL Services Authority’s report into the catastrophic collapse of the Royal Bank of Scotland, published this week, has disappointed many observers by failing to identify a clear culprit for the banks’ failings. Others suggest it was the active intervention of lawyers, rather than a lack of culpability, that saved those responsible from censure. What’s clear is that only a tougher regulatory system with penalties for failure can prevent it happening again.
 
Goodwin escapes unpunished

An editorial in the Daily Mail says that, despite challenges by lawyers for the guilty men and attempts to water down its criticisms, “the report tells a sorry tale of hubris, mismanagement, unforgivably lax regulation by the FSA itself and political incompetence on an epic scale”.
 
The Mail adds that chief responsibility rests with the RBS – then led by Sir Fred Goodwin – for spending billions on the purchase of Dutch bank ABN Amro, it could ill afford. It’s “truly a scandal” that Goodwin has not been punished in any way.
 
Indictment of regulatory system

The FSA and the Labour Party must take their share of the blame, says an editorial in The Daily Telegraph. As FSA chairman Sir Adair Turner points out, key prudential regulations were “dangerously inadequate”, because the previous government wanted to apply a “light regulatory touch”. The FSA says new regulation and supervisory approaches will create a “sounder system”, but the prospect of an appropriate penalty “for getting things so badly wrong would make it sounder still”.
 
There was a strongly cathartic element to yesterday’s report on the near-collapse of the RBS, says an editorial in The Independent. It’s also an extended mea culpa for the FSA. That there wasn’t enough evidence to bring charges with any chance of success is “a stark indictment of Britain’s regulatory system”.
 
To its credit, the report proposes that bank executives and directors be faced with direct personal consequences in the event that their banks fail - such as being stripped of remuneration and banned from future directorships, adds the Independent. “Such measures must be put in place as quickly as possible”. The FSA “needs more clout” if we are to ensure there cannot be another RBS.
 
Dispiriting bureaucratic delusion

Ultimately, there is something dispiriting about the FSA report, says Patrick Hosking in The Times. It suggests that if only the RBS had garnered more information, “if only there had been more lever-arch files”, disaster might have been averted. "This is the philosophy of the deluded bureaucrat.”
 
It’s not volume of information or box-ticking that matters - it’s quality, adds Hosking. A cogent argument for a U-turn in the RBS decision to buy ABN Amro could have been set out in five trenchant bullet points. “The tragedy was that there was no one in RBS or FSA to provide it.”
 
Culprits saved by their lawyers

The Daily Mail’s Alex Brummer says: “Goodwin’s escape from serious censure owes more to the active intervention of his aggressive personal legal team, than a lack of culpability.” Brummer adds: “The failure of regulatory backbone in the face of arrogance, excess, greed and sheer stupidity has and will continue to punish households here for years to come”. ·