Turner admits regulators 'deficient'

Regulators were "severely deficient" in their supervision of Royal Bank of Scotland, a long-awaited report on the troubled Edinburgh-based bank will say.

Lord Adair Turner, chairman of the Financial Services Authority (FSA), told its annual meeting yesterday that the report, to be published later this year, will show there were no grounds for a successful enforcement action against RBS.

The dossier will highlight the factors that led to RBS's failure and outline the issues investigated by the FSA's enforcement division. There will also be an account of the FSA's regulation and supervision of RBS before the 2008 crisis, which Turner said will "describe a process that was severely deficient". The FSA allowed the banks to operate with too little capital and rely too much on short-term funding, according to the probe.

Turner also revealed that the FSA's next consultation paper on the mortgage market review will now be published in early autumn, rather than July, to allow for more "wide-ranging debate" over its controversial proposals.