RBS probed over 'last-minute doubling' of Sir Fred Goodwin pension

Royal Bank of Scotland was today facing a City watchdog probe after it emerged Sir Fred Goodwin's pension was doubled only hours before he was ousted.

The Financial Services Authority is looking at allegations that shareholders and the RBS board were not given the full details of the deal for the chief executive.

Evidence to the Treasury select committee shows a "compromise agreement" drafted for Sir Fred had assumed he would not take his pension until the age of 60. The agreement, drafted by lawyers Linklaters on 11 October last year, would have meant the RBS chief ended up with a pension pot of £9.6million. But the deal was changed under the instructions of former RBS chairman Sir Tom McKillop to allow Sir Fred to take his pension at 50, effectively increasing the pot to £21million. Sir Fred's departure was then agreed in the early hours of 13 October.

The FSA is also likely to look at claims that non-executive directors were not fully informed of the late changes. RBS's remuneration committee minutes claim Sir Fred's departure terms represented "contractual entitlement". However, the deal was discretionary. The RBS full board meeting, which signed it off, may have misdirected itself in claiming the package had been approved by the remuneration committee.

FSA chairman Lord Turner told BBC1's The Andrew Marr Show: "There is a duty on executives to ensure there are flows of information to non-executives."

The FSA is also looking at claims by Labour peer Lord Foulkes that former non-executive directors were pressured into not asking "awkward questions" about the bank.