FSA handed Northern Rock blame

26-01-2008

FSA handed Northern Rock blame
The Financial Services Authority (FSA) has come under fire from MPs over its failure to prevent last year's Northern Rock crisis.

A report published today by the Commons' Treasury select committee says the financial watchdog should have acted sooner to prevent the lender's board making mistakes which led to a run on the bank in September.

It describes the FSA as having committed "a substantial failure of regulation" while the Bank of England is also criticised for not being "proactive" in responding to troubled global markets in August.

"It is important that the lessons are learned from this crisis, and that the changes that result from this process are implemented swiftly, given the continuing problems in the world's financial markets and the desirability of ensuring that the damage to the UK's reputation as a financial centre is minimised," the report concludes.

It recommends a new post be set up at the Bank of England of deputy governor and head of financial stability.

Conservative shadow chancellor George Osborne said the committee had attacked chancellor Alistair Darling's "lack of leadership" despite being dominated by Labour MPs.

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