Former Rock finance chief banned by FSA

The censure comes after the Financial Services Authority (FSA) levied fines and bans against ex-deputy chief executive David Baker and Richard Barclay, former managing credit director at the bank. In April, Baker was fined 504,000 while Barclay was hit with a 140,000 penalty after the FSA found them involved in the misreporting of mortgage data.

Jones left Northern Rock after Baker and Barclay were fined pending his own involvement in the watchdog's investigation. Previously, he had resigned from the board in February 2008 when the bank was nationalised but had stayed on as chief financial officer until his eventual departure in April of this year.

The FSA discovered that false mortgage arrears and repossession figures had been reported in the run-up to its collapse, which resulted in shareholders and analysts being misled. It said Jones's misconduct started in mid January 2007, at the same time that he took over from his predecessor, Bob Bennett.

The watchdog noted that while Jones was not responsible for manipulating the figures, he was made aware of the data omission by Baker in January 2007 and failed to correct it.

As a result, Jones had agreed to allow false mortgage arrears figures to appear in the 2006 annual accounts.

Jones also continued to misreport arrears on a monthly basis to internal committees and the Council of Mortgage Lenders for at least a year.

At the time, the omission made it seem as if Northern Rock arrears were under half the industry average.

By the end of 2006, Northern Rock had grown to become the fifth largest UK mortgage lender. The FSA estimates that correct figures would have either increased arrears by over 50 per cent or have pushed up repossessions figures by approximately 300 per cent.

Margaret Cole, FSA director of enforcement and financial crime, said the fine sent "a message" to the industry.

"He (Jones] had numerous opportunities to put things right, but failed to do so," said Cole.

Jones's fine was reduced by 20 per cent for settling early - otherwise, he would have faced a 400,000 fine. He has 28 days to pay the penalty.

The FSA said the censure was the third and final fine under an inquiry into manipulation of mortgage arrears at Newcastle-based Northern Rock.

Although the watchdog said staff had been "under pressure" to miss-state its figures from as early as 2005, the bank's former chief executive, Adam Applegarth, has been ruled out of the investigation.