Fred the Shred's alleged affair 'irrelevant' to RBS failure

Royal Bank of Scotland chief executive Fred Goodwin's alleged affair had no impact on the downfall of the bank, the Financial Services Authority (FSA) has decided.

In May, Sir Fred Goodwin faced claims from MPs that his alleged affair with a senior colleague could have affected his judgment as the RBS collapsed.

Goodwin took out an injunction to stop details of his private life from being brought into the public domain.

There were also demands at the time for him to be re-interviewed by the FSA as it was compiling its long-awaited report into the 2008 collapse of RBS, and suspicion the injunction had prevented the report becoming public.

But in the findings of its investigation, out today, the FSA denied Goodwin's legal action had any impact on the publication of the report.

"In the course of the past year, as the report has been developed, there have
occasionally been press reports suggesting that it was being blocked by
unreasonable legal action on the part of interested parties. This is not the case," the report stated.

The injunction brought by Goodwin in relation to his private life "has had no impact on the ability of the Review Team or Enforcement Division to conduct their work and, having investigated the subject matter of the injunction, we are confident that it is irrelevant to the story of RBS's failure," it concluded.

RBS nearly collapsed in 2008 because of poor management, inadequate regulation and a flawed supervisory system, the report said elsewhere.

The FSA admitted its own supervision was "flawed" and "provided insufficient challenge" to RBS. However, it did not concede these shortcomings amounted to negligence.