The Financial Services Authority is facing criticism tonight for closing its investigation into what went wrong at Royal Bank of Scotland without taking disciplinary action against any of the individuals involved, including the former chief executive Sir Fred Goodwin.

Amid questions about why the regulator had appointed external advisers from PricewaterhouseCoopers to conduct the 17-month review, unions accused the City regulator of being unable to "hold the sector to account".

Lord Oakeshott, a Liberal Democrat Treasury spokesman, was also tabling a question to demand a copy of the PwC review be placed in the parliamentary library after the City regulator said rules prevented it from making the report public. "This just won't wash," Oakeshott said.

The FSA blamed "bad" decisions rather than dishonesty for the events that led to the £45bn taxpayer bailout of the bank. The review by PwC – whose role as an auditor to a number of banks is being investigated by various regulatory bodies – analysed the events that led to RBS's takeover of the Dutch bank ABN Amro as the credit crunch was beginning in late 2007. PwC also looked at rights issues conducted by the bank in 2008, which are the subject of legal action by some shareholders who are concerned they were misled by the bank.

Rob MacGregor, national officer at the Unite union, described the conclusions as an outrage. "By failing to bring any formal charges against the RBS executives they have allowed some of the biggest villains of the financial crisis to go on enjoying their millionaire lifestyles whilst taxpayers experience cuts and staff face an insecure future," MacGregor said.

The FSA insisted the review concluded that "bad decisions were not the result of a lack of integrity by any individual and we did not identify any instances of fraud or dishonest activity by RBS senior individuals or a failure of governance on the part of the board".

The FSA insisted that PwC had been picked to conduct the review because it was not RBS's auditor. The regulator said it was prevented from publishing the PwC report by section 348 of the Financial Services and Markets Act.

Oakeshott said: "You can't refuse to publish the report – redacted, if legally necessary – on the worst train-crash in British company history. How can we learn the lessons if we can't read the evidence?"

The FSA warned that if former RBS directors reapplied to work in the City they could find their applications being barred or restricted to certain activities.

The watchdog's supervisory investigations into other banks that failed during the crisis, such as HBOS and Bradford & Bingley, continue.

RBS said: "RBS is wholly focused on our work to restructure the bank and rebuild value for shareholders. We welcome the conclusion of the FSA's review."