Indeed, it said that it had been investigating the “systems and controls” at the investment banking arm of RBS. It refused to say what it thought Cameron had done wrong but it did make clear that its punishment could have been more severe. For RBS’s part, its annual report

had already revealed that the FSA had been investigating its ‘conduct, systems and controls within the global banking and markets division’ and it’s this scrutiny that should be applauded; indeed we must hope that other institutions which so visibly fell from grace are also receiving the same treatment.

Comments from Hector Sants, the

FSA’s chief executive, that the regulator was “judging the judgements” of top managers in place at the banks during and after the financial crisis are also a positive signal, however it is not apparent that any action is being taken against some of those who sat at the very top of the tree at these institutions.

haNg ‘em high

A list of those who should also be facing the regulator’s wrath would be very long indeed and one would certainly suggest names such as Sir Fred Goodwin – who presided over RBS and was eventually responsible for the bank posting a £24.1billion loss for 2008 and the fact it needed substantial government support. Then we have Andy Hornby, former CEO of HBOS who took the banking group which housed the UK’s biggest mortgage lender to near-bankruptcy, only to be hastily sold off to Lloyds. We should not forget those who helmed Bradford & Bingley, Stephen Crawshaw and his team, whose tenure took B&B to the very brink before its mortgage arm was nationalised and its savings and branches sold off to Santander. Finally, if we come full circle back to Northern Rock, we must also ask why its former chief executive, Adam Applegarth, has not been bracketed with those very colleagues mentioned previously who have already been fined and banned.

rocketed along, appeared to work well for everyone.

Gemma Harle,

managing director, TenetLime

The fines given to Baker and Barclay reflect a particular aspect of the Northern Rock disaster. Even the FSA’s own ruling shows that the misreporting of arrears was not at the behest of these two individuals. Their failure was in not doing anything about the bad debts when they uncovered them. In short these directors have been judged to have failed in their duty to meet the standards required of senior individuals within FSA-regulated firms. The fines are therefore no surprise and serve as a very clear reminder to the rest of us in senior positions to ensure we perform our roles effectively.

But what of the wider context? Much of Northern Rock’s growth in the period leading up to the crisis was built on the back of intermediary lending. Intermediaries and their clients have a right to feel let down. The Northern Rock saga has hugely damaged the reputation of the industry. Public and regulatory confidence in our collective ability to conduct lending responsibly has never been lower. The television pictures of “the run on the Rock” have ensured that the bank has entered financial services folklore. Yet the FSA has not reprimanded any individuals for the strategy of accelerated growth that brought about the downfall. The infamous “Together” loans offered up to 125% of the value of a property which, while the market

These are just a few of the ‘Captains of industry’ who deserve at the very least an investigation into their own part in the downfall of their organisations. Indeed, it would be particularly unfair to just pick on those who captained the ships when there would be dozens of others no doubt within the businesses

But the outlook changed when property values started to tumble. No-one has given details of the bad loans but it would be fair guess that a significant proportion of them were in the Together book. Time is a great healer and ironically even these loans have reportedly turned the corner but that failure to acknowledge the true picture had spectacular consequences. Northern Rock is spilt milk, and those that have been involved have largely endured their fifteen minutes of infamy. A witch hunt for more guilty souls may make some feel better and send the right message to others but will it stop new types of financial meltdown? History suggests not. Every boom and bust has its own unique characteristic that means we couldn’t see it coming. This will not change. All we can realistically do is ensure the rules are in place to prevent individuals making these same errors. In reality this is difficult because the very point of a boom is that everyone is complicit to some extent. From the top down no-one wanted to recognise there could be a problem or bring the bad news back up the line. The Emperor’s new clothes spring to mind. The FSA’s severe penalties against Mr Baker and Mr Barclay go some way in dealing with the lingering unanswered questions about wrongdoing at Northern Rock.

But the full story has not been and never probably will be told. These individuals did not cause the crisis, but they illustrate how dangerous it can be when an organisation sacrifices everything in the pursuit of growth.

who should not be allowed to continue scot-free while seemingly using the all-encompassing defence that they ‘were just following orders’. The fact that the taxpayer was forced to intervene in such high-profile, private institutions and yet those who led the businesses seem to have been able to

moRtgage intRoduceR JUNE 2010 21 Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48