FSA publishes full findings of Northern Rock supervisory review

The Financial Services Authority is being urged to conduct bi-annual reviews of high-impact firms.

The recommendation is included in the full details of its Northern Rock supervisory report, issued in part on March 26.

The document also suggests the regulator consider all core areas relevant to the workings of the business.

It says: “[Analysis of] high impact firms should include more substantive, in-depth comparative financial analysis, the parameters of which would change with market conditions. This analysis should always cover the business model of the firm in question and its peers.”

These areas are particularly relevant as the original report found the FSA to have neglected to visit Northern Rock on a regular and effective basis and also failed to take into account the imbalance of the lender’s business-model.

NR’s model was based largely on securitization with 85% of its business relying on such financial instruments for funding.