Should RBS revisit Sir Fred's pension?
As I wrote here yesterday, the FSA needs to learn what it can from RBS about Sir Fred Goodwin's alleged affair, in case it has an impact on Sir Fred's fitness to exercise what's known as a "Significant Influence Function" in a bank - or whether the alleged affair could have contributed in any way to RBS's collapse in 2008.
Now, for reasons that I can't disclose (as I've said), I have reason to believe that once the FSA has the information - which it will formally ask for in the coming week - it will conclude that Sir Fred's alleged affair is not grounds for a lengthy new investigation of him.
That said, there will be those who will argue that the FSA's important judgement on this could and should have been expedited - and that would have happened if Sir Fred had not succeeded in taking out an injunction to prevent the media reporting on the alleged affair.
Which is why the injunction could be seen to have impeded the FSA in its statutory duties.
There is a second issue, however, which is whether Sir Fred breached Royal Bank of Scotland's internal code of conduct relating to how staff manage their relations with colleagues (for more on the code of conduct, see my earlier post).
If there were a breach, then the bank's board could consider whether there is a case for revisiting whether Sir Fred is entitled to all of the very large pension he is receiving (£342,500 per annum, on top of a tax-free lump sum of £2.7m), or - depending on the duration of the alleged affair - whether it could and should try to get back bonuses he received in his latter period at the bank.
If all this had happened at a company in the US, where boards are more fastidious about the behaviour of executives and where investors are also pretty hot on punishing executives who cross a putative ethical line, this would already be a hot issue.
So it will be fascinating to see whether the board of RBS - which is facing legal action in the US from investors over its collapse in 2008 - will feel it has to systematically investigate the alleged affair and the associated question of whether Sir Fred sufficiently breached his contractual duties to make him ineligible for some or all of that generous pension.
This may come down to tawdry details such as whether Sir Fred told senior colleagues - especially the bank's then chairman - about whatever relationship he may or may not have had with his colleague (sorry about the inelegant construction of that last point).