By Marcus Leach

The Financial Services Authority (FSA) has welcomed the statement from the Treasury Select Committee Chairman Andrew Tyrie which confirms that in agreement with the FSA, the Treasury Select Committee (TSC) has asked Sir David Walker and Bill Knight to conduct an independent review of the report which the FSA is producing into the failure of Royal Bank of Scotland (RBS).

The FSA report will include analysis of the causes of RBS’ failure, a summary of the findings of the FSA investigation into matters relating to RBS’ decisions, risk controls and governance processes and an assessment of the FSA’s regulation and supervision of RBS identifying any deficiencies.

The independent reviewers will examine whether the FSA report fairly reflects the findings of the FSA’s investigation of RBS and the findings of its analysis of its own regulatory and supervisory activities. The terms of reference for this independent review will be published shortly.

The appointment of the independent reviewers follows discussions between the FSA and the TSC about how to ensure that the FSA’s report will be seen as a rigorous and transparent account of the different factors which contributed to RBS’ failure.

Adair Turner, chairman of the FSA, said,

“There is strong public interest in having a clear account of the causes of RBS’ failure. The FSA is committed to producing such an account. Producing a high quality account takes time, both because the causes of RBS’ failure were complex and multi-faceted and because of the need to respect due legal process and confidentiality constraints.

“I am confident however that the final report will be seen as an open, fair, and valuable contribution to public understanding. The appointment of the independent reviewers will provide public assurance of the report’s openness and contribute to its quality. I am very grateful to them for agreeing to take this role and to the TSC and its Chairman Andrew Tyrie for their constructive role in seeking to ensure an effective and valuable report.”