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Former Northern Rock boss fined £500,000

Deputy chief executive misled City, says FSA.

David Baker was banned from serving on the board of another UK bank and fined £504,000 after he excluded almost 2,000 customers who were defaulting on their mortgage payments from reported data.

"He [also] made misleading statements regarding these impaired loans to external stakeholders, including market analysts, quoting inaccurate figures," the FSA said of Baker's action. Baker, who took early retirement in March 2008, was facing a potential fine of £720,000 but was charged less because he admitted his actions at an early stage in the investigation.

Baker said his decisions were "an error of judgment" which he regretted, although added that they were "made with the best of intentions."

The financial watchdog also penalised Richard Barclay, the former managing credit director at Northern Rock, with a fine of £140,000 saying he had not acted despite knowing the data to be incomplete. Northern Rock was nationalised in 2008 after taking an emergency loan frm the Bank of England in 2007.

"Baker and Barclay both failed to meet the standards we require of senior individuals within FSA-regulated firms. They both held senior positions of trust within the firm but they provided inaccurate information to the Northern Rock board and to the market," said Margaret Cole, FSA director of enforcement and financial crime. "The fines we have imposed on them leave no doubt that we will take action against individuals who either fail to act with integrity or who fail to perform their roles to a high standard - this is a loud and clear message that we are serious about taking action against senior directors where they step over the line."