CITY Minister Lord Myners has been taken to task by MPs over his handling of former Royal Bank of Scotland (RBS) boss Sir Fred Goodwin’s controversial £703,000 pension.

The Treasury Select Committee’s report on bank pay, to be released today, said Lord Myners should have given “a clearer, stronger direction” to RBS that there should be no rewards for failure at the bank – now 70 per cent owned by the taxpayer.

Sir Fred’s pension was boosted by the RBS board’s decision to treat him as having retired at the request of the bank, making no reductions to the pension for early retirement.

Lord Myners said he had no knowledge of the discretion used by RBS in its treatment of Sir Fred – who has become a “highly-visible emblem of bankers damaging the economy without themselves being penalised”, according to MPs.

The committee said the bank should not have been allowed to handle the pension negotiations on its own.

‘‘The RBS board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe, and also possibly dominated by Sir Fred; there were no grounds for trusting them with this operation.

‘‘We suspect that Lord Myners’ City background, and naivete as to the public perception of these matters, may have led him to place too much trust in the RBS board,”

the report said.