Andrew Tyrie warns FSA not to repeat RBS mistakes with HBOS
The Financial Services Authority (FSA) has been warned not to repeat the mistakes of the Royal Bank of Scotland report debacle when it publishes its investigation into the failure of HBOS.
The FSA's work so far is understood not to include any investigation of its own role Photo: Peter Payne
By Harry Wilson
7:45AM BST 08 May 2011
Andrew Tyrie MP, chairman of the Treasury Select Committee who last week forced the FSA to bring in independent experts to oversee its RBS report, said the regulator must "learn the lessons" from a fiasco which led to repeated delays in publication of the document.
"No doubt the lessons of the last four months over RBS will not be lost on the FSA when it comes to their work on HBOS," said Mr Tyrie. Lord Turner, chairman of the FSA, is expected to face a grilling from MPs when the RBS report is eventually published.
Having said in November that no report would be published, he was forced into an embarrassing U-turn and said a report would be published by March.
The FSA missed that deadline and last week, after weeks of negotiations between Lord Turner and Mr Tyrie, Sir David Walker, a senior adviser to US investment bank Morgan Stanley, and Bill Knight, chairman of the Financial Reporting Review Panel, were brought in as independent reviewers.
Senior banking industry and political sources told The Telegraph that Lord Turner's handling of the episode was beginning to damage his credibility, as well as that of FSA chief executive Hector Sants, who will become deputy Governor of the Bank of England when the regulator is split into two new authorities.
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"Adair's judgment has proved to be seriously flawed. The way he and other senior managers have handled this entire episode has unnecessarily hurt their credibility," said one source.
A senior banking executive said it was "absolutely vital" full reports be published into the collapse of RBS and HBOS to allow other banks to see what could be learned from their failures.
"These type of reports are very useful to allow us to perform an analysis of our operations and procedures to see if there are areas we need to improve in," he said.
Mr Tyrie emphasised that any report must look at the FSA's role in the failures, particularly the decision to approve RBS's involvement in a consortium bid for Dutch bank ABN Amro after the credit crunch had begun.
"It is essential that the report fully explains the role of the regulator in the failure of RBS. Only that way can we move forward," he said. "Everyone agrees it was unacceptable to expect the public to swallow a one-page summary of the FSA's investigation of their work into RBS," he added.
The FSA's work so far is understood not to include any investigation of its own role, despite a 19-month study and £7.7m in fees paid to PricewaterhouseCoopers, which helped with the work.
A two-month Telegraph investigation into the RBS collapse found many senior executives had never been questioned or faced only general questioning and were never asked to explain why they thought the bank had failed.
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