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BBA commends FSA report

The British Bankers' Association (BBA) has commented on the self-critical review released yesterday by the Financial Services Authority (FSA).

Contained in the report was an admission of severe shortcomings in the City watchdog's risk reviews in the run-up to last year's near-collapse of the Northern Rock bank.

The regulator said that it had allowed the bank to continue with a risky growth plan that involved overuse of the money markets to generate income.

When inter-bank market lending slowed severely due to the credit crunch, Northern Rock was left unable to service its debts.

"It is important for the UK banking industry that the FSA continues with its proportionate regulatory framework, using the principles-based approach and with the right individuals in place," the BBA said in a statement.

"Good quality regulation and regulators benefits everyone - the economy, the banks and customers alike - we support the FSA in its efforts to improve how we can work together to ensure we are well placed to meet the challenges of the global financial market."

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