The Financial Services Authority (FSA) has seen fit to fine two former Northern Rock directors and banned them from working for a regulated financial firm in the future.
Former deputy chief executive David Baker was fined ?504,000 for misreporting mortgage arrears data, and former credit director Richard Barclay was fined ?140,000 for failing to maintain accurate financial data. The pair admitted misconduct to the FSA and their fines were reduced because of their co-operation with the regulator.
David Baker accepted the FSA?s findings ?with great sadness?. Responsible for reporting Rock?s financial information, Mr Baker was deputy chief executive between 2004 and 2008. Almost 2,000 loans were omitted from mortgage arrears and repossession figures in 2007, but Mr Baker did endeavour to correct the figures and later made misleading statements to market analysts.
He admitted that he had made an ?error of judgement?.
Mr Baker claimed that his actions did not affect customers or result in the bank?s collapse later on, but the FSA said: ?Important to the firm?s rapid growth was the maintenance of its asset quality. The value of Northern Rock?s securities (shares and bonds) was in part derived from a market perception of how its loan book was performing.?
Richard Barclay, the FSA said, had failed to prevent ?improper practices?, and some staff took advantage of this, which led to under-reporting of mortgage arrears figures. The regulator said that Mr Barclay?s conduct ?demonstrated a lack of skill, care and diligence in establishing and overseeing effective systems and controls?.
Margaret Cole, the FSA?s director of enforcement and financial crime, told BBC News that the fines would leave no doubt that the FSA will take action against individuals failing to act with integrity or not performing their roles to a high standard. It was, she said, ?a loud and clear message that we are serious about taking action against senior directors where they step over the line.?
