Kat Higgins, Sky News Online
Two former Northern Rock executives have been fined and banned by the City watchdog for misreporting mortgage arrears figures.

The Financial Services Authority (FSA) ordered the state-owned bank's former deputy chief executive David Baker to pay 504,000 and banned him from "performing any function in relation to any regulated activity".

Former managing credit director Richard Barclay was fined 140,000 and banned from performing "any significant influence function" at an FSA-regulated firm.

The regulator said that, despite becoming aware at the beginning of 2007 that there were 1,917 loans omitted from the mortgage arrears figures, Mr Baker did not pass on the information internally.

He also "agreed a course of action which resulted in the loans not being reported".

The FSA added Mr Barclay did not ensure the figures reported were accurate "despite warning signs at an early stage".

Both men admitted their misconduct and co-operated fully with the investigation.

Mr Baker's fine was reduced by 30% as a reward for his co-operation. Otherwise, he would have had to pay 720,000 - 216,000 more.

Mr Barclay's fine was also reduced - it was originally set at 300,000.

The FSA said the bank's mortgage arrears figures would have increased by 50% if they had been properly reported.

Mr Baker was deputy chief executive from January 2004 to March 2008 and left the lender two months later in May. Mr Barclay went in March.

In a statement sent to Sky News Mr Baker said: "I wish to emphasise that appropriate financial provisions had already been made, in Northern Rock's 2006 accounts, for these impaired loans.

"The decision I took also had no adverse impact on Northern Rock's customers. It did not cause, or precipitate, the bank's later liquidity difficulties.

"I accept full responsibility for my own actions. Where the FSA has decided my conduct fell below the expected standard, it is only right that I accept the personal and financial consequences imposed."