City regulator proposes tougher rules over banking risks

The City regulator today defended its decision to take no action against bosses at part-nationalised Royal Bank of Scotland (RBS), but said new rules were needed to punish bankers who take too many risks.

Adair Turner, chairman of the Financial Services Authority (FSA), wrote in the Financial Times that while RBS chief executive Sir Fred Goodwin and his team had made bad decisions they had not broken any rules.