Rock regulator guilty of 'systematic failure'

A damning report into the collapse of Northern Rock has blamed the Financial Services Authority for a "systematic failure of duty".

The City's financial watchdog failed to spot the bank's "reckless" business plan, the Treasury Select Committee said.

Northern Rock had to be bailed out by the government to the tune of £24 billion after a credit crunch last September.

Panicking savers started withdrawing all their savings.

Chancellor Alistair Darling prolonged the crisis by delaying an announcement that the Government would guarantee savings, the select committee added.

Chairman John McFall said: "The failure of Northern Rock, while primarily a failure of its directors, was also a failure of its regulator."

He added: "The FSA appears to have systematically failed in its duty and this failure contributed significantly to the difficulties and risks to the public purse that have followed."

Alistair Darling's handling of the crisis was "more damaging to the health of the company than might otherwise have been the case", the report concluded.

Conservative shadow chancellor George Osborne accused the chancellor of "dithering" and said: "Alistair Darling's credibility is in shreds."

© Independent Television News Limited 2008. All rights reserved.