David Baker was also banned from “performing any function in relation to any regulated activity”, effectively ending any chance of the 56-year-old returning from retirement. Northern Rock refused to comment on whether he will still be in line for his bumper £1m pension pot.
Baker, who was at the bank for over 30 years before retiring in 2008, had overall responsibility for the firm’s debt management unit. Despite becoming aware in January 2007 that almost 2,000 loans had been omitted from the mortgage arrears figures, he failed to hit the panic button, instead opting to cover up the breach.
He even quoted the fudged figures to external stakeholders, including market analysts. If the figures had been correctly quoted the mortgage arrears figures would have shot up by an estimated 50 per cent.
He had previously sparked fury after accepting a 16 per cent pay rise to £530,000 shortly before the bank was bailed out by the government.
At the same time, former managing credit director of Northern Rock Richard Barclay was fined £140,000 for his role in the scandal. He was also banned from working in any position of “significant influence” at an FSA-regulated firm.
Margaret Cole, FSA director of enforcement, said: “The fines we have imposed 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.”
As Baker and Barclay admitted their misconduct their fines were slashed from £720,000 and £300,000 respectively.