The Commons Treasury Select Committee’s long-awaited report into the Northern Rock debacle will be published on Saturday and is expected to conclude that the Financial Services Authority (FSA) should not be given new powers to intervene to help distressed banks.

Leaks of the report said last night that the FSA does not deserve additional powers, given that it was unable to identify the flaws in the Northern Rock business model and prevent a subsequent run on the Newcastle-based bank. The report is also expected to highlight the Bank of England’s decision not to prop up the banking system with a cash injection last summer as the credit crunch began to take hold.

Alistair Darling, the Chancellor, will not escape criticism over his handling of the affair, although the Treasury escapes relatively unscathed compared with the level of criticism levelled at the other two bodies that make up the tripartite authority.

While the report does not support additional powers of intervention for the FSA, it will call for significant reforms of the tripartite structure. Poor communication between the three is one of the criticisms levelled by the Select Committee, it was reported last night. Complacency and clumsy decison-making were also highlighted as flaws. The Northern Rock board was also singled out for its belief in a defective business model.

Mr Darling had proposed to give the regulator insolvency powers. These would allow the FSA to step in if certain actions, such as a request by a troubled bank to the Bank of England for emergency loans, are triggered; seize and protect cash deposits and repay them to customers or parcel them off to another bank; and gain access to information it needs to assess a troubled bank’s liquidity position.

However, pressure will now be on the Chancellor to scrap these proposals. MPs are said to argue in the report that it should be the Bank of England that is handed a greater role in ensuring financial stability.

The FSA has denied that its senior officials had insufficient market experience to deal with the Northern Rock debacle. When he appeared before the Select Committee, Hector Sants, the FSA chief executive, said: “The current FSA team is well equipped to give market expertise. I don’t believe that a lack of understanding of the market is at issue here.”

Northern Rock needed an emergency loan from the Bank of England in September last year after the global credit squeeze made it increasingly hard for the bank to borrow the short-term funds it needed from the global money markets.

Last week, the Government announced a rescue plan as a move back from the brink of nationalisation. The bank’s current £25 billion of loans from the Government will be converted into bonds before they are sold to investors.

The loan will be paid back, but the Government will guarantee the bonds throughout their terms. The aim is to speed up a sale of the troubled lender to a private buyer, and reduce the likelihood that the Government will have to nationalise the bank.

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