Mortgage News
Northern Rock finance director banned and fined £320,000
Majority state-owned lender Northern Rock’s finance director David Jones has been banned and fined by the FSA for misreporting arrears figures.
The bank executive can no longer perform a regulated function in financial services after a series of misreporting deceptions.
The FSA confirmed Jones’s misconduct started in mid January 2007 when he agreed, along with David Baker, the former deputy CEO at the bank, to report false mortgage arrears figures in the 2006 annual accounts. The correct figures in the explanatory text would have reduced possessions figures by 300% or increased arrears by 50%.
For nearly a year, Jones continued to misreport the arrears and possessions figures on a monthly basis to NR’s assets & liabilities committee (ALCO) and, on a quarterly basis, to the Council of Mortgage Lenders (CML).
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.
“This is a message to all FSA approved persons, that they must take their individual responsibilities seriously at all times, or suffer the consequences.”
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The FSA explained that from 2005, NR staff felt under pressure to report arrears figures at half the CML average.
The FSA said to achieve this, a series of improper actions were taken which were outside NR’s stated policy. For example, cases where a possession order had been made against a property, but where physical possession had not yet been taken were excluded from all arrears and possessions figures.
Jones had omitted 1,917 cases in this way by January 2007 during his time as FD (designate) between 10 January 2007 and 1 February 2007.
Jones got a 20% discount for settling in Stage 2 of the FSA’s executive settlement procedures, instead of the full £400,000 fine.