View more on these topics

FSA whistleblower claims complacency over building society regulation

A former FSA supervisor has accused the regulator of “apathy and complacency” in its regulation of building societies prior to the credit crunch, according to the Financial Times.

Liberal Democrat Shadow Chancellor Vince Cable wrote to FSA chairman Lord Adair Turner after being contacted by the whistleblower. He is calling for an investigation into the claims.

The former supervisor, who worked in the retail firms division, claims the FSA ignored a warning in 2006 that self-cert loans had been bundled up and sold to building societies that thought they were buying conventional mortgages.

The FT reports that in late 2005 and early 2006 the supervisor took part in thematic reviews of mortgage books bought by building societies from wholesale lenders. It emerged that one book, which was classified as having full evidence of borrowers’ incomes, in fact contained no proof of income for any of the loans.

The whistleblower claims the FSA turned a blind eye to this, only sending out a general letter to building society chief executives reminding them to ensure their due diligence is thorough.

An FSA spokeswoman denies the claims, saying they “bear no relation to reality”, and adds that the regulator will respond to Cable “in due course”.

She says: “Whether that response becomes public is a different matter.”

Recommended

Buy-out business jumps by half, says ABI

Buy-out firms reported a 50 per cent increase of funds under management to £22bn at the end of 2008, according to new figures from the Association of British Insurers.

Guide

Guide: 10 required letters — what to send, to whom and when?

This guide from Johnson Fleming will take you through the required communication and also give ideas for additional actions that will ensure your auto-enrolment project is a success. The topics in this guide include: the letters you need to send out; what to send and when; the importance of employee engagement; and what to consider as additional communication.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment