Northern Rock suffered from 'lack of sufficient supervision'

The UK's Financial Services Authority admitted today that there was a lack of sufficient supervision over Northern Rock.

The regulator said there were continuity problems with the managers responsible for supervising the bank, with three different heads of department in the role during two and a half years.

It also admitted that none of the heads of department had met Northern Rock since January 2005, despite managers on average meeting one of the firms under their charge every week.

The FSA is proposing to recruit an extra 100 staff to boost its risk assessment and supervisory capability in light of the review.

The regulator said it had cut supervisory staff numbers by 5% over the past two years as part of a policy to reduce the workforce “to fund better-quality individuals”.

But it said it would now ensure there would be a minimum requirement of employees in charge of firms classed as higher risk.