Be afraid, says Hector Sants, as he warns the City that the Financial Services Authority is no longer going to take prisoners. Tough talk may be cheap, but it is welcome, nonetheless.

Alistair Darling is promising that the FSA will be given new powers to stop banks taking excessive risks. This, he says, would have enabled it to prevent Royal Bank of Scotland from buying ABN Amro.

The truth is that the FSA could probably have stopped RBS going through with the deal if it had been determined enough. The problem was not lack of powers so much as lack of will and an attitude of mind.

Still, giving it extra powers will do no harm, and Mr Sants's tough talk is certainly a step in the right direction.

It needs to be careful that its words match its actions, however. Some City institutions were smarting yesterday at Mr Sants's criticism that they failed to challenge the management of banks they had shares in.

Who was it who stopped shareholders from forcing the entire board of RBS to stand for re-election last year, they ask. Answer: the FSA.

It turns out that the FSA told shareholders not to rock the boat at RBS. It was worried that a management upheaval would further undermine confidence in the bank just as it was trying to raise £12 billion from a rights issue.

In retrospect, getting rid of the management could hardly have made matters worse. And by getting rid of Sir Fred Goodwin before he turned 50, at least the RBS pension fund would have saved £8.3 million.

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