Was the FSA warned about the management of Icelandic banks trading in the UK?
In a rather startling revelation the former Singer and Friedlander chief executive Tony Shearer has told MPs on the Treasury select committee that he previously warned the FSA about the standard of management at the Kaupthing Icelandic bank which eventually took over Singer and Friedlander. This is the first time such a revelation has been disclosed and certainly turns attention to the FSA and what action, if any, they took on the complaint.
It would appear that his specific concerns regarded the age and lack of experience of the directors, the fact that only 10% of the company's profits came from traditional banking as well as the confirmation directors borrowed £19 million to invest in shares in their own business in 2004, prior to the Singer and Friedlander takeover.
There were also concerns expressed by regulators in the Isle of Man in relation to a lack of communication from the FSA in the run up to the Icelandic bank being placed in administration and the subsequent consequences of this action. The FSA would appear to have a number of points to address in the short to medium term as the Treasury select committee looks to get to the bottom of what is turning out to be a very embarrassing situation for both regulators and the UK government.
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