Staff at Britain’s main City regulator paid scant attention to Northern Rock in the two years before its collapse, kept few records of meetings and failed to act on signals that the lender was acting recklessly.
This is what Financial Services Authority (FSA) admits in its internal report, which reveals a disfunctional organisation paralysed by high staff turnover, regular organisational changes and a constant series of events in the City which dominates all their time, according to The Guardian.
The report reveals supervisors presented their managers with few reports on the risks taken by Northern Rock, leaving managers unable to form a strong view of the bank's business model, which has since been described as ‘reckless’.
Managers, in turn, asked few questions of their staff and unknowingly let the risks go on over several years, despite soaring lending growth at the bank, which by the start of last year accounted for a fifth of UK mortgages. Still the bank was not challenged in any meaningful way before April 30 last year.
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