Today’s report into the failure of the Royal Bank of Scotland in 2008 will highlight amongst many issues the fact that the UK’s Financial Service Authority (FSA) really did not understand the complexities of the business which it was in the position to regulate.
The spectacular failure of RBS ( a cost to the UK taxpayer of some £45 billion in the bail out) can be attributed to a number of factors not least the total ineptitude and recklessness of the senior management as typified by Sir Fred Goodwin.
This is an outstanding example of a business out of control. At the same time it begs the question how many businesses are similarly basket cases yet by smoke and mirrors are able to befuddle and confuse both their shareholders and bankers.
For example as the owner of an SME are you really confident in the integrity of the figures presented to you by your finance department? Or as the shareholders of RBS are you merely content to receive good news without challenging the how and whys of these results being achieved?
It all boils down to the age old fact that if something looks too good to be true it usually is.
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