NRock finance director banned and fined £320k

David Jones, a former finance director at majority state-owned lender Northern Rock, has been banned and fined by the FSA for misreporting arrears figures.

The bank executive is no longer allowed to perform a regulated function in financial services after a series of misreporting deceptions.

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%, the FSA found.

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, says as a senior director and 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."

The FSA found from 2005, NR staff felt under pressure to report arrears figures at half the CML average.

The FSA says 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.