Former Rock director Jones banned for life, fined

According to a report in The Guardian on line (http://bit.ly/9194cm) the former finance director of Northern Rock, David Jones, today hit out against the Financial Services Authority as he was handed a life-time ban and fined £320,000 for allowing the bank to report mortgage arrears figures that were lower than they should have been.

Jones said he would now "pursue opportunities either in an advisory or full-time basis" as the ban by the City regulator only stops him taking on roles in a senior position that requires the FSA's authorisation.

The FSA concluded that Jones lacked integrity after he agreed in mid-January 2007 to allow false mortgage arrears to appear in an explanatory text in the annual report. After Northern Rock was nationalised in February 2009 he remained with the bank in senior role and but left in April 2010 shortly after his close former colleague, David Baker, who had been deputy chief executive, was fined £504,000 and barred from working in the industry for misreporting the same arrears figures. 

When the FSA published its sanctions against Baker it also fined Northern Rock's former managing credit director Richard Barclay £140,000 and gave him a less draconian ban by prohibited from performing any role with "significant influence" at a firm regulated by the watchdog.

Robin Ashby commented ; "As with Baker, the FSA has quite correctly  taken a hard line, and I hope that others learn this lesson very well.  The fine is severe, but the damage to his reputation is greater, and I hope that anyone seeking to pay him for his advice in the future notes the disasterous effect that his approach had when he was in a top position at Northern Rock."

"Unquantifiable" indemnities granted to Directors

The question we're entitled to ask is : Why aren't such indemnities procured commercially under standard Directors and Officers Insrance policies?

TREASURY MINUTE

INTEGRATION OF NORTHERN ROCK (ASSET MANAGEMENT) AND BRADFORD 7 BINGLEY;

INDEMNITIES TO DIRECTORS

Dated 8 July 2010


As announced on 24 March 2010 by the then Chancellor of the Exchequer, Northern Rock (Asset Management) and Bradford & Bingley will be integrated under a single holding company (HoldCo) wholly owned by HM Treasury.

Under the new structure Northern Rock (Asset Management) and Bradford & Bingley will be wholly owned subsidiaries of HoldCo, with all three companies sharing the same board structure.

HM Treasury intends to provide, from August 2010, certain guarantees in respect of the indemnities which will be issued to the directors of the three entities which indemnify the directors against liabilities and losses incurred in the course of their duties as directors. Payment under the guarantee will only arise if the companies are unable to satisfy their obligations under the indemnities.

The following guarantees will be provided by HM Treasury:

Guarantees to support the indemnities issued by HoldCo to its directors;

Guarantees to support the indemnities issued by Bradford & Bingley to the directors of Northern Rock (Asset Management) joining its board;

Guarantees to support the indemnities issued by Northern Rock (Asset Management) to the directors of Bradford & Bingley joining its board.

HM Treasury believes that such arrangements are appropriate to ensure that a member of a public corporation who has acted honestly will not have to meet out of his or her own personal resources any personal civil liability which is incurred in the execution or purported execution of his or her board functions, save where the loss is incurred as a result of, or attributable to, any dishonest, fraudulent or reckless act or omission byt the director or in respect of which indemnification is prohibited by law or regulation.

These indemnities are unquantifiable