Fred Goodwin could face charges under Companies Act

Former RBS boss Fred Goodwin could be brought to trial over the collapse of the bank, despite a regulator’s report stating there was not ‘sufficient evidence’ to punish the directors for the failure.

In the Financial Services Authority’s RBS report published on Monday, chairman Adair Turner said no individual could be punished under its rules but Goodwin (pictured) could face charges under The Companies Act, according to The Telegraph.

The Companies Act section 386, which is policed by the Department of Business, states directors  must be able to ‘disclose [the company’s] financial position with reasonable accuracy at any time’ and must ensure ‘an adequate record is made and retained…of any expected loss, liability or contingency material to the assessment of the current position’.

Monday’s report suggests RBS directors breached The Companies Act rules as ‘RBS appeared uncertain of its capital position at critical times. This included after March 2008’.

A source told The Telegraph: ‘It is clear from the report that RBS neither had accurate nor timely information. Some critical [data] was six months out of date, and it is clear losses were missing and asset valuations were overly optimistic.’

Non-compliance with The Companies Act section 386 is punishable by up to two years in prison and an unlimited fine. The Department of Business said it most often prosecutes cases of malpractice by company directors in relation to the keeping of accounting records.