Massive fines for faulty bankers

The Financial Services Agency has hit the former Deputy Chief Executive of Northern Rock with a fine of over £500,000 - and a colleague in charge of the Debt Management Unit £140,000. The full judgements and a news release can be found on the FSA website.

David Baker, 57 next month, retired from Northern Rock in early March 2008. At the time the chairman Ron Sandler praised his "immense contribution to the business" (For which he was paid in excess of £530,000 a year. He sold Northern Rock shares for £1,200,000 in January 2007. The shares started to slide shortly thereafter down to their present worthlessness. The zeroes seem to have been unequally distributed...)

Baker has been fined and banned "as a result of Mr Baker's misconduct as an approved person under section 59" of the Financial Services and Markets Act 2000.

He was found guilty of a lack of integrity in that he knew in December 2006 that 1,917 loans had been omitted from the impaired loans figures but he did nothing about it, and then made misleading statements.

Richard Barclay, who left Northern Rock last month, knew that the firm’s arrears position enabled senior management within NR, analysts and the FSA to form a view of NR’s asset quality, but failed to ensure that the management information reported by the DMU was accurate despite warning signs at an early stage.

Robin Ashby comented "This is outrageous, but the punishment has been savage. There are immediate questions that must be answered:

"Did anybody else in Northern Rock know about this deception, and if not, why not? What did they know and when did they know it? Who else is to be held to account?

"Who will pay the fines? Are they personal - if so, they are about a year's wages. If not, are they being paid by the company, in effect the taxpayer?

"And what actions will the company now take against the individuals, whose bonuses may well have reflected a level of performance which is now shown to have been based on false premises? I believe Baker took a reduced pension and pay off when he left. was there a deal here? And what were the terms of Barclay's departure?

"Shareholders and other stakeholders who have suffered so grievously need answers, and need them promptly."