Sants blames Tiner as MPs grill FSA over RBS failure

Very disturbing. The continued "nothing to do with me sir, it was him" stance is not helpful. I wonder what the FSA staff he had inherited think about this when being described as "completely inadequate"?

Who are they, do they agree?

Surely we should know?

Hector Sants has apologised, so everything is OK now. He will seek to block any attempt by former RBS managers to work in finance. Will he also block Regulators who failed to regulate and as a result cost the country £45B. Oh no! He is about to become a Governor of the Bank of England. Just the man for the job.

Well with all the bonus rows over Hester's £1m let's not forget Sants was assigned £700,000 last year for overseeing this mess. Sligh wiff of hypocrisy from the politicians. Seems only civil servants deserve bonuses.

This report is an interesting twist on others appearing this morning.

So, it wasn't Mr Sants' fault but his predecessor CEO Mr Tiner's fault that FSA failed to oversee RBS correctly and failed to foresee and prevent its collapse?

The next time I have an IFA client who is being pursued relentlessly by FSA Enforcement for some alleged wrongdoing I shall apply the Walker and Sants Defences:

1. It wasn’t my fault but the fault of the product provider, of the SIPP provider, of the client, of wheoever else I can think of to pass the buck to

2. I was too busy with TCF to attend to my duties

3 The intellectual environment was not conducive to my observing the FSA Rules

4. I am an IFA not out of choice but force of circumstances

5. I am sorry, truly sorry that I breached the rules, that clients lost out and that I was not paying attention.

Who do Walker and Sants think they are kidding?

Are they both stupid enough or arrogant enough to think that they have any vestige of credibility after seeking to exculpate FSA and Mr Sants himself for their respective failures in regulatory oversight of RBS?

I really do hope that when Mr Tyrie digests Mr Sants’ evidence he will find it as unpalatable as does I bet the vast majority of IFAs.

I would like to think that the politicians will realise that in Mr Sants we have someone who is not man enough to hold his hands up when the organisation of which he was CEO at the relevant time the RBS collapsed, which contributed enormously to plunging the UK into repeated financial turmoil, and that he is not a fit and proper person to take up any position overseeing the Bank of England.

It is quite outrageous.

He really is a slimy piece of ****. Still the government that appointed him blamed their predecessors for everything that went wrong on their watch, so he's just learning from his previous masters.

It is time the press properly opened and investigated the stenching can that is remuneration at the top levels of the bureaucracy and the FTSE350 companies, rather than just focussing on bankers bonusses.

Can we use the "I'm truly sorry" defence too?

I would be interested to know if Mr Sants believes there are parts of the FSA where the staff are still "completely inadequate", and if so, what threat this might pose to the financial system and what is being done about it. It's funny how candid opinion is only given about someone else's time in charge.

A very sloppy performance from Hector, after all the whole RBS issue was the fault of IFA's, they allowed investors to keep money on deposit that was providing smooth returns despite some very dodgy investment decisions such as buying ABN Amro.

IFA's should have spotted the issues and reported the issue to the regulators.

Hector, simply call a S404 past business review into all advisers who allowed monies to be left on deposit with RBS, HBOS, Northern Rock etc, and get their P.I insurers to stump up some money back to the government to cover some of the taxpayer bailout.

Let us hope that the TSC and politicians now see that he is not fit for the forthcoming job at the B of E.

He applied for the head post at the FSA and if thought he was unsuitable he should either have said so at the outset or stepped down when he found that he was out of his depth.

The problem with the advice world is we all blame him as he is at the top, but what about all the rest of those still employed at the FSA that sat back and watched it all happen. Were they scared of him, did they not see it or were they just out of their depth as well.

He may well claim he is not to blame, and indeed, there may be some truth in his defence. But how would we be able to tell? There has been no independent s.14 enquiry into these failures...because...

...The FSA is unaccountable in practice.

Of course, some of us would say that this is less down to individual personalities, and more down to 'institutional incompetence'. Walker's reference to 'intellectual environment' is code for something that is well known in public choice economics - regulatory capture.

In principle, the FCA/PRA split is a move in the right direction. But until Ministers of the Crown are made responsible for wider prudential regulation (being made to answer to the House and the Electorate) and smaller professional bodies (made up of practitioners and real clients) are responsible for small advisory firms, we will continue to have this perverse unaccountable leviathan blaming everyone else other than themselves.

Note to Alasdair: have you considered the comedy value of getting some of your clients to change their names to 'Hector Sants'? I mean, reading about how 'Hector Sants lacked integrity' the next time they want to do a stich-up would at least add some cheer to the occasion.

Here's a story:-

As John Tiner is handing over his office to Hector Sants, Hector asks him whether or not he has any useful tips on how to handle things when the going gets rough.

John Tiner hands him two envelopes and tells him to keep them unopened until a storm blows up.

After a few years, a storm blows up and Hector isn't quite sure what to do, so he opens the first of the two envelopes. In it is a letter saying Blame it on me and everything will be okay because by now I'll be comfortably out of the picture.

So Hector blames it all on his predecessor and everything's okay. No action is taken against John Tiner because, as he said, he's now comfortably out of the picture.

A while later, another storm blows up and again Hector doesn't know what to do about it, so he opens the second envelope. In it is a letter saying Write two letters.

Alasdair - yes Walker, Sants and numerous others are arrogant enough. Arrogance is sadly an increasing trait in the higher ranks of bureaucratic megaliths such as the FSA. His responses before the TSC are a disgrace and a total abdication of responsibility and an unnecessary slur on the FSA staff.

ROY

I would not say that Sant's response was a unnecessary slur on SFA staff. Let's face it, many of them were/are just as useless and very willing to put his directives into action. Truth is the FSA is riddled with failures and the whole kit and caboodle should be scrapped. As for the "sorry" man taking up a position as a governor of the B of E, well is that not typical of a system that is out of control and simply 'jobs for the boys', regardless of their ability or past history. I wonder what he put in his CV?

Regulators Hand Picked to Fail ?

listen to:- Big Think Interview With Robert Engle

A conversation with the Nobel Prize-winning economist.

http://bigthink.com/ideas/21580

And it seems nothing is to change.

Not me Guv is typical of his type. When they want big pay packages and bonuses they tell us about the huge responsibilities they have taken on but when they mess up and are found wanting it is never their fault. It was always someone else. God help us whem he gets into the BoE. Can't someone stop that from happening?

If it was all down to his predecessor John Tiner how about him being called to account in his lofty eyrie in the new Resolution/Friends Life outfit which has proved to be very clever at discovering previously unknown reserves to give to shareholders but not much if any additional benefits to it's With Profits policyholders.

Somebody earlier also made mention of RBS and Hester. When looking into his background a few days ago I was interested to see that prior to RBS he was operations manager at Abbey National and financial director or some such at British Land. These were not exactly hugely successful enterprise but none of the blame for their problems seems to have landed on him. He appears to be Teflon coated also just like Sants.

Is it any wonder the finances of this country are in a mess. We even have the bankers who got us into this mess still telling us about how clever they are and how indispensable they are instead of hanging their heads in shame and being prepared to make proper recompense. Had some of their banks been let go bust they would still be unemployed.

This really makes my blood boil.

Yes Mr Sants you can only apologise but have you considered the in un repairable damage that is being done to many small businesses and people's lives.

You then have the audacity to say on one hand the people you inherited were wholly In adequate. Yet on the other you stated high salaries have to be paid in order to attract the right people. Furthermore, bonuses are being given out like confetti.

@John Smyth 3

Your comments about the people who got us into the mess are still telling us how to get out of it are frighteningly brought to focus in the Charles Ferguson Oscar winning documentary "Inside Job".

The bit that made me laugh was when the ratings agencies were questioned by the US senate committee about the AA- rating that Lehman's had the day before it collapsed, and their response was it was merely an opinion that could not be relied on by any other institution, yet we all go into a tailspin when they now downgrade a company or even a country. Why? When they have already said on oath that their opinions cannot be relied upon.

The whole hierarchy is a case of "emperor’s new clothes".

In some other reports of yesterday's TSC interview, it is reported that Sants didn't actually want to be the CEO and had to be cajoled by colleagues. The implication being that although RBS hadn't actually gone down at the time he was hired, he wasn't really to blame because he never wanted to be in charge when it did.

And then we have the Guardian article

http://www.guardian.co.uk/business/2008/mar/30/creditcrunch.northernrock?INTCMP=ILCNETTXT3487

and we find quite some divergence in the story. Is it a good idea to appoint a first rate fibber to Deputy Governor? Someone please send this to Mr Tyrie.

Yes, someone should furnish Andrew Tyrie with this information ~ but it has to be someone from his Chichester constituency, otherwise it'll be ignored.

As I understand, the Treasury Select Committee cannot actually block Hector Sants’ appointment as deputy governor of the Bank of England but it can recommend that he is unsuitable for the job.

The rules by which IFAs have to operate are very detailed on what has to be done, and when it has to be done but almost devoid of any guidance let alone prescription of how it should be done and how it should be recorded as having been done. In my experience whether or not the IFA has broken the rules and failed in his duties is very often a matter of the subjective opinion of a particular officer employed by FSA of which Mr Sants is CEO and for which he is responsible.

Where an IFA is found by the FSA, after its subjective investigation, to have breached the rules comprehensively, it will describe the hapless IFA in the Decision Notice as variously lacking competence, have failed to act with care, or having acted recklessly, lacking integrity and as a result not being a fit and proper person to be authorised.

Lacking integrity doesn’t mean being dishonest as in embezzling money – it merely means that the IFA has breached the rules systematically.

Yet here we have a man who has apologized for getting it wrong in a big way, so big that it cost the taxpayer at least £45bn and assisted in bringing the UK economy to its knees.

How many businesses have been ruined as a result of the financial crises and the recessions that have followed? How many people’s savings and pensions have disappeared? How many people now face an impoverished future because of that?

An apology is tantamount to an admission.

Were Mr Sants an IFA in front of the Regulatory Decision Committee of the FSA admitting that his actions had brought his clients to their financial knees, had caused widespread financial damage, brought the financial system into disrepute and damaged confidence in the system then I have no doubt that he would be described as having acted without care and competence, of reckless misconduct, lacking integrity and not being a fit and proper person.

FSA impose ruinous fines on IFAs as penalties for breach of the rules. These fines cause bankruptcies and severe hardship.

In addition, as a risk management measure, the FSA can withdraw an IFA’s permissions and issue a prohibition notice against the person from ever being in regulated financial services.

There is no sanction by way of fine that can be imposed on Mr Sants for his self admitted breach of his duties as CEO of the FSA. But the TSC can declare Mr Sants as being unsuitable for the role of Deputy Governor as risk prevention measure.

I do hope that Mr Tyrie, who chairs the TSC, will consider that if only as a mitigation of risk.

The disgrace of it is that even if Mr Sants is declared to be unsuitable he will still be financially secure by a pay-off and pension - which is something that IFAs who have broken the rules may not look forward to.

@Alasdair

Sed quis custodiet ipsos custodes?

Perhaps we require some form of Regulators Regulatory Authority to ensure that 'Senior Management' take responsibility for their Bureaucracies, implement appropriate 'systems & controls' and 'cascade' down a few more messages than 'Vote Labour on General Election Day'.

Perhaps being in a 'significant influence function' in a regulator should be a 'controlled function' requiring external approval - and the possibility of fines and striking offs.

Of course we do ~ an All Party Independent Regulatory Oversight Committee with the power to say to the FSA/FCA: This is wrong and you aren't going to do it. But, unless or until the government formally retracts its earlier declaration that the FCA, like the FSA before it, will be accountable only to its own board, nothing can change. All Andrew Tyrie's calls for the regulator to be accountable are just empty posturing and his salary as head of the TSC is nothing but a waste of tax payers' money.

@MiB

We DO have a Regulators Regulatory Authority - its called the House of Commons Treasury Select Committee.

Sorry - I forgot, Hector doesn't like that and feels he can just ignore it.

Can I be the one to draft the Rules for Hector and his ilk?

I know just the style I would follow......

How can the TSC be an RRA in the face of the government's avowed position that the FCA., like the FSA before it, will be accountable only to its own board? Hector Sants CAN ignore it and, back in March last year, he said as much to Andrew Tyrie ~ That's the way FSMA says it is and, if you don't like it, you'll have toi get the law changed ~ if you think you can.

The only piece of legislation available to Andrew Tyrie is the Statutory Code of Practice For Regulators but to that he seems completely oblivious.

Should we be due a refund of regulatory fees?

I have paid fees for the services of a regulator to regulate the industry in which I work and they have not provided that service! (in fact failed miserably)

If I had paid for PPI then ........?!

Unfortunately, he can ignore it. There are so many faux routes to accountability under the Regulatory regime - the TSC, the Courts, the Complaints Commissioner, the Practitioner and Consumer Panels, the Annual Public Meetings attended by cranks and passing IFAs - that none of them actually exercises any real leverage.

There was a time when policy was determined by Ministers of the Crown whilst Civil Servants were both civil and servants. The accountability mechanisms were a bit blunt at time: cat-calling in the Commons, ministerial resignations, reshuffles, General Elections (whatever happened to those?) and occasionally even the inherent jurisdiction of the Courts to kick a minister in to touch when somebody exceeded their powers, judged in their own cause and so forth. But a Minister could become an ex-Minister if he presided over the Falklands getting invaded, Sterling collapsing et cetera et cetera.

To Richard Hardy ~ CAR in return for a specified service proposition is a requirement of the regulated, NOT the regulator. Regulation is about Do as we say, not as we do. Hadn't you heard?

Hi Julian - apologies, I forgot our position in the pecking order :-)

Hi Richard ~ You could always write to the FSA setting out your case and demanding a refund of your levies. The risk, of course, is that the recipient would swiftly refer the matter to his/her colleagues responsible for arranging arrow visits, as a result of which you'd be stamped on so hard that your innards would fly out of your mouth. That'll teach the impudent little rat a lesson he won't forget in a hurry.

I heard on the news that Mr Sants said the law stopped him from acting against RBS. But I thought the FSA were above the law .

Alasdair, you're the best. :)