UK regulator admits key failings
LONDON – The UK’s Financial Services Authority (FSA) has admitted four “key failings” in a summary of its internal audit review of the organisation’s supervision of the recently nationalised bank Northern Rock. The FSA says a reform programme will be “advanced urgently”.
The first failing was a lack of supervisory engagement with Northern Rock. Specifically this means the responsible team failed to pay enough attention to the model pursued by the bank’s management as market conditions deteriorated.
The FSA’s line management then failed to provide adequate oversight and review of the quality of Northern Rock’s supervision. Key meetings went unrecorded and senior FSA management remained insufficiently engaged.
The resources specifically directed to Northern Rock’s supervision were inadequate, the report says, highlighting that there were too few people involved and more resources needed.
Lastly, the FSA did not make best use of the information and resources available, with inadequate use of intelligence in calculating the firm’s risk exposure, leading to inadequate execution of supervisory action.
The FSA says the failings found with regard to Northern Rock represent a scenario “at the extreme end of the spectrum”. As part of its wider programme of improvements, it intends to concentrate on core prudential risks, and to create a new group of supervisory specialists to review its engagement with high-impact firms.
More on Risk Management
Banks need to embrace radical change to satisfy Basel principles
New watchdog a great idea in theory, banks say - but early months have been difficult
ABSTRACT This paper is concerned with the derivation of a residual-based a posteriori error estimator and mesh-adaptation strategies for the space-time finite element approximation of parabolic problems...
Welcome to The Journal of Computational Finance's Online First Forum. Here you will find the latest peer reviewed, accepted papers before they are available in print. With Online First publication,...
Sign up for Risk.net email alerts
Sponsored video: Elseware
Oxford professor David Vines argues that the carrot is as important as the stick
Sponsored webinar: IBM
Watch highlights of this year's London conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.