Cable consults legal team on possible sanctions for RBS directors

The 452-page examination carried out by the Financial Services Authority (FSA) into why the lender needed a £45.5 billion rescue confirmed that none of the directors will face enforcement action from the regulator.

But Mr Cable, whose department is in charge of bringing disqualification proceedings, has asked his legal team to provide further advice on action to be taken in light of the review.

He has already been given “underlying evidence” from accountancy firm PricewaterhouseCoopers in February but was advised this was insufficient to proceed.

Meanwhile, FSA chairman Adair Turner said a debate was now needed to change the rules to make bankers more accountable and to ensure that executives and boards strike the right balance between risk and return.

He suggested a “strict liability” approach, making it more likely that a failure like RBS’s would be followed by “successful enforcement actions”, including fines and bans.

Other suggestions included that senior executives and directors of failed banks could automatically be banned from future positions of responsibility, or that a significant part of their pay is deferred or lost in the event of failure.

He added: “There is a strong argument for new rules which ensure that bank executives and boards place greater weight on avoiding failure.”

The FSA will publish a discussion paper on the options in the new year.

The other main recommendation thrown up by the report was that banks should be forced to get “explicit regulatory approval” before making any major acquisitions.