Heads should roll at Bank, Treasury and the FSA

By Tony Shearer, former chief executive of Singer & Friedlander

The report states: “The FSA’s overall pre-crisis supervisory approach was inadequate with, in retrospect, an overly reactive approach and insufficient data available to supervisors to assess prudential risks fully.”

So Hector Sants, chief executive, had no idea that the whole of the FSA’s approach was flawed.

This is precisely the warning I gave to Callum McCarthy, then chairman of the FSA, in March 2005. Back then I invited him to visit Singer & Friedlander to see at first hand how the FSA regulated what I called “trivia and minutiae” and paid no regard to the possibility of “systemic failure of the banks” (which was one of only two of the FSA’s objectives).

This week the Bank of England said it had “every confidence in Hector Sants” and looked “forward to him joining us as deputy Governor in 2013”. Even today the Bank of England has no idea what happened and what the FSA is supposed to be doing. They are not the right people to regulate the banks.

Given that RBS is only one of the FSA’s failings, when will the FSA publish its reports into its failure to regulate other banks such as Kaupthing Singer & Friedlander (where depositors have lost money) and HBOS? ....