Terry Murden: FSA to be in the firing line along with RBS

THE Financial Services Authority should ensure that its staff are issued with tin hats tomorrow as it publishes the findings of its two-and-a-half-year investigation into the collapse of the Royal Bank of Scotland.

Criticism on a riotous scale is expected when it confirms that none of the directors face further enforcement action, that the prospectus to the controversial £12 billion rights issue in 2008 was not misleading and that it has not even fully investigated all the alleged failings at the bank. Equally damning will be the report’s self-criticism. The FSA is expected to admit to failings in its processes as the banking crisis developed.

A dose of humility will be welcome, though, if the regulator was part of the problem, it begs questions as to why this inquiry was not carried out by an independent investigator.

The 490-page document will, however, signal a sea-change of sorts in future behaviour. It is expected to recommend that future acquisitions by banks are more closely scrutinised by the FSA’s successor and that banks be required to put risk management controls ahead of maximising profits.

It is bound to reopen arguments that will reveal nothing new, though by making public at least some of the reasons for the bank’s failure it may encourage legislators to make it easier for those such as the angry out-of-pocket shareholders to pursue their cases for compensation.

Their difficulty will be in proving the failings at RBS were anything worse than incompetence, greed and over-exuberant ambition – none of which is a crime.

The SNP’s currency conundrum

WHAT currency will the SNP choose in the event that it should lead Scotland to independence? This issue is creeping up the agenda and was mentioned here last week. Not a single SNP representative came forward with a response, but I’m prepared to be patient. Hopefully, it won’t take too long as we’ve a referendum coming up. The issue has been raised publicly by Iain McMillan, director of CBI Scotland, and Mark Tennant, chairman of Scottish Financial Enterprise.

This is not about political point-scoring or lobbying either way on independence. It is a practical appeal for businesses to know whether Scotland’s currency will be denominated in sterling, euros or groats.

The decision is fundamental to how the country would be managed. By retaining the pound, and the authority of the Bank of England, it would continue to be subject to monetary policy dictated by London, including the setting of interest rates. Adopting the euro would shift these decisions to Brussels and the European Central Bank.

Exactly how either of these decisions would enhance Scotland’s ability to control its economy under “independence” is yet to be explained.

Where have all the MEPs gone?

EUROPE has spent the past year threatening to tear itself apart and yet there has been barely a beep from any of the 736 members of the European Parliament, each one costing the taxpayer £2 million a year, including salaries, allowances and all the rest. The same invisible men and women who want to control the pay packets of bankers whom they blame for causing the financial crisis.

So what have the MEPs been doing while Rome (and Athens) burns?

Next week they are expected to give the go-ahead to spend €23 million (almost £20m) on two buildings for the European parliament in Brussels and Strasbourg to house the ever-growing number of parliamentary staff, including the 18 new MEPs joining as a result of the Lisbon Treaty.

Not content with all this extra space they are looking at buying a third building which will cost another €15m.

Austerity is clearly a matter for others to worry about.