Mortgage brokers have laid the blame over the Northern Rock mass panic on the Government, the FSA and the Bank of England for failing to be a white knight to the lender weeks ago.
The Government said on Monday that it would guarantee all deposits held by Northern Rock customers in an attempt to stop the scenes of panic seen across the country since last Friday.
Robert Sterling managing director Kevin Duffy says the Government and the regulator have cases to answer over how they handled the situation as he believes Northern Rock’s brand has been so contaminated by the issue it will be hard for it to recover.
He says: “If I were a shareholder in Northern Rock, I would feel pretty aggrieved with the way the Government and the FSA have handled this situation. I think it is complacency on the part of the regulator. It should have realised that the hysteria would have been inevitable.”
Duffy says the FSA should have had confidential discussions with Northern Rock weeks ago when it was first realised it was having liquidity problems. “There should have been a white knight situation weeks ago and that would have laid the ground for more stability now,” he says.
John Charcol senior technical manager Ray Boulger expects the FSA and Government to face a grilling in front of the Treasury select committee meeting on Thursday. He says: “The key question is whether the Bank of England has handled the situation well. If it had it pumped more money into the system early on, the situation would never have happened. Northern Rock perhaps would not have had to go cap in hand to the Bank of England.”
Mortgageforce managing director Rob Clifford says Northern Rock and the Government should have been more resolute in their statements. “By saying over and again that consumers can take out their savings if they wish is basically tantamount to saying come and get it. They should have been asking customers to stand by the bank.”