The Financial Services Authority (FSA) recently banned and fined Northern Rock’s former finance director, David Jones, £320,000 for the misreporting of mortgage arrears that started mid-January 2007. The role of Northern Rock was certainly central in the recent financial crisis, but to what degree is not fully understood. If there was no Northern Rock would a financial crisis have occurred at all? And how did the misreporting of mortgage arrears lead to its collapse?
In a public statement, the FSA director of enforcement and financial crime said:
“Jones had a duty to reveal the true position to the public and to important internal committees. He had numerous opportunities to put things right, but failed to do so.
“This is a message to all FSA approved persons, that they must take their individual responsibilities seriously at all times, or suffer the consequences.”
As further investigations are made in the future about the role of Northern Rock in the banking crisis (by Tipping Points and others) it will be interesting to see who is held responsible and why, and perhaps also who is not held accountable. Further research may also shed light on whether the individual actions of bank employees were fundamental to the crisis.