Northern Rock admit failure to notify defaulted debt

The Financial Services Authority (FSA) have fined David Baker £504,000 and imposed a ban from the City. David Baker who was the Deputy Chief Executive at the new nationalised Northern Rock left the bank in May 2008 and was penalised for failing to report the extent of defaulted  mortgage payments to shareholders and the FSA alike. 

The FSA also imposed a fine on Richard Barclay, another executive at the bank for failing to report the position of the bank with respect to its mortgage book.

Simon Morris, a partner at law firm CMS Cameron McKenna, warned: “By banning two managers, the FSA has once again made it clear that it will review the actions of senior management whenever a firm fails and hold them to account.”

Mr Baker, who worked for Northern Rock for 34 years, said he accepted the FSA’s findings: “I decided to give the Debt Management Unit six months to rectify the misreporting. My decision, and its time frame, was made with the best of intentions.

“However I now recognise that this decision, taken to resolve and not hide the reporting error, did not make these loans immediately transparent. I made an error of judgement and I regret it.”

Justice Goddard commented on the recent fines and said, “the continuing post mortem will no doubt lead to further action being taken by the FSA whilst highlighting the improper conduct of directors and senior employees.”

“There will be an influx of individuals searching for help with Debt management plans and further repossessions and bankruptcies may result.”