The Financial Services Authority (FSA) may have deliberately misled the committee over Icelandic banks, MPs have claimed.
In a hard-hitting report the Communities and Local Government Committee, which is investigating why local authorities deposited more than £1bn with Icelandic banks, criticised the regulator.
"Answers from the FSA are unhelpful to the point where we wonder whether they might constitute deliberate obfuscation", MPs on the committee claimed. The public criticism is deeply embarrassing for the FSA.
Alongside the criticism of the FSA's evidence, the MPs also accused the regulator of abrogating its responsibilities to regulate treasury management advisers. "We strongly suspect that the clear answer to our question of what steps the FSA has actually taken to regulate treasury advisers is "none". Given the large sums which are in stake in local authority treasury management, we consider this to be an abrogation of responsibility," wrote the MPs.
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