RegulationFeb 27 2013

RBS hit with larger fine due to broken promises, FSA

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Royal Bank of Scotland was fined more than Barclays because the bank’s senior management had given personal assurance to the Financial Services Authority that the problems would be fixed, yet failed to live up to its promises, the regulator said.

Appearing in front of the Banking Standards Committee today (27 February), Lord Adair Turner, FSA chairman, was quizzed by MPs as to why senior individuals were not more severely disciplined by the regulator.

One MP said: “Why is it that the FSA isn’t coming down incredibly hard when something goes wrong?”

Anticipating Mr Turner’s response, the MP added: “When everyone resigned, the reason they resigned is because they came here and had an absolute mauling at the hands of the Treasury Committee.”

Lord Turner responded: “One of the reasons we fined RBS more than Barclays was we demanded that senior management attest they had fixed the problems, then a year later it was obvious that that fixing hadn’t fully occurred.”

He also noted that the FSA’s report on Libor would be ready in five days’ time.

Earlier this month (6 February), RBS was fined £87m for its role in the Libor rigging scandal, the biggest single fine ever levied by the regulator.

Barclays was fined £60m in June 2012, and UBS was subsequently ordered to pay £160m in December last year.