View more on these topics

FSA admits it needs to learn Northern Rock lessons

The FSA says it has serious lessons to learn in the aftermath of the Northern rock fiasco particularly around stress testing of extreme situations and probability analysis.

Speaking at the Treasury select committee meeting today, FSA chief executive Hector Sants said the episode showed the regulator needed to look again at its supervisory processes.

He said probability of getting into difficulty analysis on Northern Rock had been incorrect and that more extreme stress testing was needed.

He also suggested that in the case of Northern Rock the three year period between each full regulatory analysis was too long.

Sants also accepted the FSA needed to do more to communicate with the general public issues around bank solvency to ensure confidence.

FSA chairman Callum McCarthy said compensation arrangements needed to be updated to offer better compensation and access to funds straight away in the event of a collapse.

McCarthy told MPs the main difference between the Bank of England and FSA is the FSA believes the problems over keeping the lender of last resort facility covert were more practical than legal.

He said in was unlikely that the issue could have been kept covert although there were legal issues with the Markets Abuse Directive in certain situations.
Sants also said work needed to be done to bring more transparency to the role of credit agencies.

Sants said: “We agree there is work to be done as to what use the institutional investors make of credit agencies, how do they engage with them and if is there proper transparency there.”

He told MPs: “There are lessons to be learnt here with regard to our supervisory practices. We do need to look back over our engagement with companies, in two areas -assessment of probability of getting into difficulty….. and we need to look more carefully at stress testing issues.”


Foundering on the rock?

David Turner, a partner with Foot Anstey Solicitors, on whether, in the face of the Northern Rock fiasco, IFAs need to worry about investors making claims over lost funds

A week to bury bad news

Two months on since the credit crunch first hit the UK’s shores and job redundancies in the UK mortgage market are starting to make the headlines.

Threat to pension providers over Omo delays

The FSA is to review the speed at which pension providers transfer open-market annuity option funds, with action threatened against the slowest for not treating customers fairly.Legal & General wealth policy director Adrian Boulding says: “It will make the FSA behave like a Rottweiler and crack down on those insurers which are dragging their feet […]

The factory factor

Andy Curran, director of intermediated distribution at Prudential believes that a move to factorygate pricing can bring a major boost for adviser businesses


Britain's “Forgotten Army”: The collapse in self-employed pension membership – and what to do about it

Pension scheme membership among employees has risen by more than five million in the past four years because of the policy of automatic enrolment into workplace pensions. But Britain’s army of 4.4 million self-employed people, who account for one in seven of the workforce, are not covered by automatic enrolment. Pension coverage among the self-employed […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm