The City regulator handed out its third and final fine yesterday under an inquiry into staff manipulation of mortgage arrears figures at Northern Rock in the run-up to its collapse.
Northern Rock’s former finance chief, David Jones, was ordered to pay £320,000 by the City regulator and banned from working in any regulated activity for the part he played in the misreporting of mortgage arrears figures.
The Financial Services Authority (FSA) has already imposed two hefty penalties since uncovering the data manipulation.
Former Northern Rock deputy CEO David Baker was fined £504,000 in April and Richard Barclay, previously the bank’s managing credit director, was hit with a £140,000 penalty after the FSA found them involved in the misreporting of mortgage data.
The FSA discovered that false mortgage arrears and possession figures had been reported before the bank’s nationalisation, which resulted in shareholders and analysts being misled. Margaret Cole, FSA director of enforcement and financial crime, said yesterday’s fine sent a message to the industry.
The FSA has not taken any action against ex-Northern Rock boss Adam Applegarth in relation to this case.
It said there was no evidence to suggest the former chief executive knew about the misreporting.
Mr Jones, who quit the asset-management side of the company in April, agreed with Mr Baker to allow false mortgage arrears figures to appear alongside the 2006 annual accounts and continued to misreport data for nearly a year, according to the watchdog.
The FSA investigation into mortgage figures did not relate directly to the bank’s collapse into public ownership, but did reveal that the three senior executives effectively hid more than 1,900 mortgages in arrears in the months before the bank failed.
The FSA said that while Mr Jones was not responsible for manipulating the figures, he was made aware of the data omission by Mr Baker in January 2007, but failed to correct the mistake and knew the information was being used in internal and external communications.
The lender was nationalised in early 2008 after it was forced to seek emergency funding from the Bank of England and suffered the first run on a UK bank for 150 years.
Ms Cole said: “This is a message to all FSA-approved persons, that they must take their individual responsibilities seriously at all times, or suffer the consequences.”
Mr Jones’s fine was reduced by 20% for settling early, otherwise, he would have faced £400,000. He now has 28 days to pay.
Northern Rock said: “The investigation related to a period before the company entered public ownership. The company is not subject to any sanction from the FSA as a result of this investigation.”
Part-nationalised Lloyds Banking Group is selling its Ecuadorian branch assets and liabilities to Banco Pichincha for up to £16.1million.
The business operates through two branches and employs 108 people. Private-banking operations in the South American country are not included in the sale.