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Former Northern Rock exec fined by FSA

The former deputy chief executive of Newcastle-based Northern Rock has been fined £504,000 for “misreporting” the number of mortgage customers who had fallen into arrears.

The Financial Services Authority (FSA) has also banned David Baker from joining the board of another UK bank.

Baker admitted making misleading statements to the City over the state of Northern Rock’s loan book, in the months before the bank collapsed into public hands.

His actions meant that nearly 2,000 customers were excluded from the data, disguising how many had missed mortgage payments.

The FSA said: “Despite becoming aware in January 2007 that there were 1,917 loans omitted from the mortgage arrears figures, Baker failed to escalate the information internally and agreed a course of action which resulted in the loans not being reported.

“He also made misleading statements regarding these impaired loans to external stakeholders, including market analysts, quoting inaccurate figures.”

Baker would have been fined £720,000, but received a 30% discount for admitting misconduct at an early stage in the FSA’s investigation.

Baker, who took early retirement from Northern Rock in March 2008 at the age of 54, has also been banned from “performing any function in relation to any FSA regulated activity”.

The FSA also imposed a £140,000 fine on Richard Barclay, the former managing credit director at Northern Rock.

The regulator said that Barclay had also known that the mortgage arrears data was incomplete, but had taken no action. The fine was reduced from £300,000, partly for reasons of “hardship”.

This was posted in Bdaily's Members' News section by Ruth Mitchell .