Watchdog Is Blamed over Collapse of Building Society
Byline: Andrew Picken Scottish Political Reporter
THE country's financial regulator was yesterday blamed for a systematic failure to prevent the collapse of Scotland's largest building society.
MPs on the Scottish Select Committee said the Financial Services Authority (FSA) failed to issue clear warnings or adequately supervise the Dunfermline Building Society as it racked up scores of risky commercial loans during the property boom.
The FSA's failure to act allowed the society's board to keep lending recklessly which led to its collapse in March.
The Select Committee is now calling for independent health checks for all financial institutions after the society's customers were left in the dark about its problems until it was too late.
But despite his heavy criticism of the FSA, Select Committee chairman Mohammad Sarwar, Labour MP for Glasgow Central, refused to back Tory calls for the financial watchdog to be scrapped.
He said: 'It is clear the Dunfermline Building Society made some serious mistakes but the FSA simply did not have the proper checks and balances in place.
'The FSA should have played a more vigorous role in these aspects.' The society - Britain's 12th biggest - came under particular criticism in the Westminster report for racking up a [pounds sterling]9. …