Leader: Talk is cheap - action is FSA's only credible currency now

ALMOST three years on from the collapse of Royal Bank of Scotland and HBOS, two of the country's largest banks, and customers, shareholders, staff and the general public still await an official account from the regulator on what went wrong.

It is an extraordinary - and extraordinarily woeful - delay given the shockwaves that the demise of these two banks delivered to the UK's financial system, the wipe-out of tens of billions of pounds of shareholder value, the huge subventions from the taxpayer, losses of many thousands of jobs and the blow dealt to Scotland's long and proudly-guarded reputation in the field of banking.

Given official assurances at the time of the crisis, and since, of thorough inquiries into the causes of the debacle, the lapses of corporate and regulatory governance - and vitally, the lessons to be learnt - little wonder the patience of the Commons Treasury Select Committee is wearing thin. It has been pressing the top regulator, the Financial Services Authority, for news of progress. But news from the FSA is scarce, and obtaining information a process akin to drawing teeth.

We now learn, in a reply by Lord Adair Turner, the FSA's chairman, to Andrew Tyrie, the chairman of the select committee, that the causes of the failure of HBOS will be subject to a wide-ranging investigation, and that the it is now subject to the FSA's most "serious" level of investigation. "HBOS's failure," writes Lord Adair, "resulted in the need for significant public support, via emergency liquidity assistance, guarantees and equity injection. And HBOS's role in the pre-crisis credit boom was a key element in the developments which led to the financial crisis and the macro economic harm which it has caused. There is, therefore, a public interest in knowing what happened at HBOS."

But all this was blindingly obvious at the time of the bank's demise. The FSA's "serious level" investigation should surely have been embarked upon years ago. The FSA cannot even confirm whether it has interviewed the ex-chief executive, Andy Hornby. Its response has all the speed and urgency of a comatose carthorse.

The wider review to which the FSA's statement refers will be conducted along the lines of that currently being undertaken on the Royal Bank of Scotland - another inquiry the conclusions of which the public keenly awaits. The FSA pledged to publish a "comprehensive account of why RBS failed". Lord Adair now admits that the FSA's review "has been highly imperfect" but that "imminent" publication "will highlight the sort of issues that would need to be addressed in the new legislative framework". As for the demise of the Dunfermline Building Society, no study at all is to be made public. Like the 2008 statutory annual report to members, it remains a work of mystery. This is a lamentable failure and MPs must press the FSA for far swifter action.