The Treasury Select Committee has ruled that the failure of the Financial Services Authority to intervene in the takeover of ABN Amro by Royal Bank of Scotland was a "serious misjudgement."
In a report published today entitled: 'The FSA's report into the failure of RBS', it states that the FSA should have intervened at an early stage and could have even intervened later, albeit with difficulty.
Earlier this year, former FSA chief executive Hector Sants said the FSA had no regulatory basis to intervene and to interfere would have risked acting as a shadow director.

Andrew Tyrie MP, chairman of the Treasury Committee, said: "The FSA's failure to assess the risks of the deal represents a serious misjudgement on the part of the supervisory team and the senior management."
The ABN Amro deal was completed in October 2007 and it was later judged that RBS has proceeded with this deal with inadequate due diligence and appropriate heed to the risks involved. RBS later failed and had to be bailed out by the taxpayer in October 2008.
The report described this deal as "a misjudgment with catastrophic consequences."
Regarding the future, Mr Tyrie said the Prudential Regulatory Authority would need to have the self-confidence to intervene.
He said: "We need a regulator with the self-confidence to intervene, even if it might cause some destabilisation in the short-term.
"We recommend the Government include an explicit requirement for the PRA to approve major bank acquisitions and mergers in forthcoming legislation."