Staff monitoring Britain's banks paid little attention to Northern Rock in the two years before its collapse, kept few records of meetings and failed to act on signals that it was acting recklessly, according to the main City regulator, the Financial Services Authority.
In an internal report, the FSA paints a picture of a supervisory team faced with high staff turnover, regular organisational changes and a constant diet of events in the City that absorbed all their time. It said supervisors presented their managers with few reports on the risks taken by Northern Rock, leading to a view at the top of the regulator that it was a low risk.
Without the reports, managers were unable to form a strong view of the bank's business model, which has since been described as "reckless". Managers, in their turn, asked few questions of their staff and remained ignorant of the risks over a period of years.
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