The City watchdog yesterday continued its pursuit of former Northern Rock executives, fining the bank's former finance director David Jones £320,000 and banning him from the City. The fine was levied because of his role in hiding the true level of the bank's mortgage arrears before the Rock's spiral into crisis that led to its nationalisation.
Mr Jones is the third and last Northern Rock executive to be fined over the case. The bank's former deputy chief executive David Baker was fined £504,000 in April and Richard Barclay, its former managing credit director, was hit with a £140,000 penalty after the Financial Services Authority (FSA) found they had also been involved in misrepresenting the arrears.
Their actions led to nearly 2,000 loans which should have been classified as in arrears being left off the Rock's books. The FSA found that Mr Jones's misconduct began in January 2007 when he agreed, along with Mr Baker, to allow false mortgage arrears figures to appear in footnotes to the bank's 2006 annual accounts.
It came at a time when staff within Northern Rock's debt management unit felt they were under intense pressure to maintain the bank's arrears level at less than half the average reported by the Council of Mortgage Lenders. At results briefings Northern Rock executives would regularly boast of its good arrears performance.
Mr Jones described the penalty imposed on him as "disproportionate", although he still settled relatively early and the FSA said he would have had to pay £400,000 if he had not done so.
Margaret Cole, the FSA's director of enforcement and financial crime, said: "Even though other senior directors within the firm were involved in the misreporting of arrears and possessions figures, as a senior director himself and as an FSA authorised person, 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." She said the fine was designed to send "a message".Reuse content