FSA concedes there's room for improvement after Northern Rock

Hector Sants, chief executive of the Financial Services Authority, has admitted that there are "lessons to be learned" from the Northern Rock bail-out.

Mr Sants and FSA chairman Sir Callum McCarthy were grilled by MPs on the Treasury Select Committee last Tuesday over the City regulator's handling of the crisis at the bank. In particular, the FSA was criticised for not keeping a close enough eye on Northern Rock's finances to ensure it did not get into trouble.

"You are dealing with a bank whose lending has quadrupled from £25bn to £100bn. It was taking one in five mortgages and you were not doing a full assessment for three years," said Michael Fallon, Conservative MP and a member of the committee.

In response, Mr Sants conceded: "I think there are lessons to be learned here with regard to our supervisory practice."

But John McFall, the committee's chairman, signalled he was not happy with the FSA's regulation of Northern Rock and said he wanted greater "openness" from the regulator in future.

Senior executives from the bank will appear in front of the committee this week.