Consumer Panel responds to Northern Rock Review

The Financial Services Consumer Panel today welcomed the FSA's Internal Review of Northern Rock, but was disappointed that there had not been more independent input to the Review.

The Panel believes the FSA is to be congratulated for acknowledging its shortcomings, but independent auditors could have provided a valuable wider perspective.

Panel Chairman John Howard commented, "The FSA concludes that even if supervision had been acceptable it was by no means the case that that would have changed the outcome. This suggests to me that the events surrounding the failure of Northern Rock, including the sudden collapse in credit markets, were testing the limits of regulation anyway. No regulator can guarantee to prevent all failures. In those circumstances, a realistic compensation scheme which pays out quickly is vital to prevent another bank run."