THE finance director of Northern Rock at the time of its near collapse last night branded a ban and fine by the financial watchdog “unfair and disproportionate” as penalties for former executives reached £1m.

The Financial Services Authority (FSA) said former Northern Rock finance director David Jones had “numerous”

opportunities to put things right after he misreported mortgage arrears figures in early 2007.

Yesterday, the FSA handed Mr Jones, who became finance director at the bank only months before its near collapse in September 2007, a £320,000 fine and prohibited him from performing any function in relation to any regulated activity.

In April, the Rock’s former deputy chief executive David Baker and former managing credit director Richard Barclay received fines totaling £644,000, as well as bans from working in the City, as part of the FSA probe into the concealment of bad mortgage debts at the bank.

Mr Jones, who was finance director for 12 months from February 2007, left the bank, where he had worked for 14 years, on April 21 this year after it emerged he was under investigation The FSA claimed that in January 2007 Mr Jones and Mr Baker agreed to allow false mortgage arrears figures to appear in explanatory text published with the bank’s 2006 annual accounts.

But Mr Jones last night said that the FSA had “chosen to disregard” that, as well as ensuring that the pending possessions were fully provided for in the financial statements, he also ensured that there was no impact on future provisioning levels.

Mr Jones added: “I was satisfied that stakeholders received sufficient information on credit quality to assess future provisioning levels on the residential loan book; if this were not the case, market expectations would have had to have been adjusted.

“In the first half of 2007, the residential provision charge was only £2m, meaning that residential loan credit quality was not material to the financial position or prospects of Northern Rock at the time.

“I accept that I did not ensure that information on residential arrears prepared and presented by others was corrected to include certain accounts known as ‘pending possession cases’.

“However, I consider that the FSA’s conclusions and imposed penalty are both unfair and disproportionate.”

Mr Jones, who said he had co-operated fully with the FSA’s investigation, said: “I will now put this matter behind me and move on.

“I intend to pursue opportunities either in an advisory or full-time basis building on over 30 years’ experience in finance.”

Although there is no suggestion the three mens’ actions caused the subsequent difficulties at the bank, which was nationalised in February 2008, in its judgement on Mr Jones the FSA said reporting correct figures would have either increased arrears by more than 50 per cent or possessions figures by about 300 per cent.

The FSA said that for nearly a year, Mr Jones was responsible for the continued misreporting of arrears and possessions on a monthly basis to Northern Rock’s assets and liabilities committee and, on a quarterly basis, to the Council of Mortgage Lenders.

Margaret Cole, FSA director of enforcement and financial crime, said: “Jones had a duty to reveal the true position to the public and to important internal committees.

“He had numerous opportunities to put things right, but failed to do so.”

At the time of his departure, Mr Jones was chief financial officer of Northern Rock Asset Management, the “bad bank” that was split off from the “good bank”, Northern Rock plc, on January 1.