Terms of reference for review of FSA's report into failure of RBS

Mr Tyrie said:

“The public has not yet had an adequate explanation of the reasons for RBS’s failure.  They are owed it.  Billions of pounds of taxpayers’ money has been put at risk.   This is why we asked the FSA to publish their findings.  It is why we have appointed independent advisers to assess the report produced by the FSA on the basis of those findings.  We also need to know what the FSA were doing at the time of RBS’s failure and what they have subsequently done to get to the bottom of it.”

The terms of reference of the review are:

• To review and report on the extent to which the FSA report is a fair and balanced summary of the evidence gathered by the FSA and PricewaterhouseCoopers during their review of the failure of RBS, and whether it fairly reflects the findings of the FSA’s investigation. 
• To review and report on whether the FSA’s report is a fair and balanced summary of the Authority’s own analysis of its regulatory and supervisory activities in the run up to the failure of RBS. 

Background:  

In December 2010 the Financial Services Authority issued a brief statement closing its supervisory investigation into RBS.  The FSA said that, for legal reasons, it was unable to publish more detailed findings.  These findings were based on three reports relating to enforcement prepared by PricewaterhouseCoopers.

The Treasury Committee expressed concern in correspondence that, without publication of the FSA’s findings, the public could not have confidence that the necessary regulatory lessons had been learned.  Nor had an adequate explanation of the reasons for RBS’s failure been given.  On 13 December 2010 the Committee asked the FSA to reconsider its decision not to publish these findings. 

In response, the FSA agreed on 15 December to prepare a report for publication.  In addition the FSA proposed that it should report on its regulation and supervision of RBS. In March 2011 the Committee requested that this report by the FSA, summarising RBS’s failure and the FSA’s actions in relation to it, be subject to independent review.  The FSA confirmed that it accepted the need for such a review in a letter on 28 March.

The independent reviewers, Sir David Walker and Bill Knight, will report to the Treasury Committee in due course.

Attachments:

Attached to this press release: 

1.    Terms of Reference

2.    Statement of Committee purposes

3.    Letter from Chairman of TSC to Lord Turner – 13 December 2010

4.    Letter from Lord Turner to Chairman of TSC – 15 December 2010

5.    Letter from Chairman of TSC to Lord Turner – 15 December 2010 

6.    Letter from Lord Turner to Chairman of TSC -  17 February 2011

7.    Letter from Lord Turner to Chairman of TSC – 28 March 2011