FSA bans ex-Northern Rock finance director

The Financial Services Authority (FSA) has banned former Northern Rock finance director David Jones and fined him £320,000 for misreporting mortgage arrears figures.

The FSA said that Jones (pictured), along with former deputy chief executive David Baker allowed false mortgage arrears figures to appear in explanatory text published with the 2006 annual accounts.

Reporting correct figures would have either increased arrears by over 50% or possessions figures by approximately 300%, the regulator said.

Margaret Cole, FSA director of enforcement and financial crime, said: ‘Even though other senior directors within the firm were involved in the misreporting of arrears and possessions figures, as a senior director himself and as an FSA authorised person, Jones had a duty to reveal the true position to the public and to important internal committees. He had numerous opportunities to put things right, but failed to do so.’

For nearly a year, Jones was responsible for the continued misreporting of arrears and possessions figures on a monthly basis to Northern Rock's assets & liabilities committee and, on a quarterly basis, to the Council of Mortgage Lenders, according to the FSA.

In a statement Jones said the FSA's ban and fine were 'unfair and disproportionate'.

‘I accept that I did not ensure that information on residential arrears prepared and presented by others was corrected to include certain accounts known as “pending possession cases”.  However, I consider that the FSA’s conclusions and imposed penalty are both unfair and disproportionate,' he said.

‘As well as ensuring that the pending possessions were fully provided for in the financial statements, I also ensured that there was no impact on future provisioning levels.  I was satisfied that stakeholders received sufficient information on credit quality to assess future provisioning levels on the residential loan book; if this were not the case, market expectations would have had to have been adjusted.’

Jones said he intended to stay working in financial services, either on an advisory or full-time basis.

In April Baker was fined £504,000 by the FSA for allowing 2,000 loans to be omitted from the mortgage arrears figures. Richard Barclay, former managing credit director, was also fined £140,000. Both were banned from working in the financial services sector.

Baker claimed he had given Northern Rock's debt management unit six months to rectify the misreporting.

‘My decision, and its timeframe, was made with the best of intentions. However I now recognise that this decision, taken to resolve and not hide, the reporting error, did not make these loans immediately transparent,’ said Baker.