Lib Dems: FSA failed to realise risks

Northern Rock's weaknesses should have been spotted by the Financial Services Authority (FSA), the Liberal Democrats have insisted.

The party's economic affairs spokesperson, Vince Cable, called for "directly responsible" individuals at the FSA to be "called to account" as the financial watchdog publishes its internal review.

He said the Commons' Treasury committee's finding of "systemic failure of duty" should be acknowledged and suggested better supervision could have prevented the crisis.

"Regardless of the credit crunch, it is clear that Northern Rock's business model was unsustainable in all but the most benign of environments, and the FSA should have realised this," Mr Cable said.

"This review should not be seen as closing the case over the Northern Rock debacle, but as a way the FSA can learn from its failures.

"The FSA must take seriously its responsibility to identify and act upon potentially risky business practices, regardless of whether they have been acceptable in the past."