A senior politician on the Treasury Select Committee yesterday called for the City watchdog to apologise for its flawed supervision of Northern Rock.

Michael Fallon, Conservative MP for Sevenoaks, made the demand as the Financial Services Authority (FSA) prepared to publish a report today on its dealings with the troubled Newcastle bank.

The FSA has already admitted that its monitoring of the Rock was unacceptable. Mr Fallon, the most senior Tory member of the influential committee, which has also investigated the Rock debacle, said that the report must contain the word “sorry” as well as a declaration of failure.

“They failed in their duty,” he said. “There were too few people regulating a very large bank and they didn't pay enough attention to liquidity issues.”

Mr Fallon also questioned whether the FSA should have been allowed by the Treasury to conduct its own internal investigation. “I'm surprised that they've been allowed to investigate their own failure,” he said. “The police wouldn't be allowed to do that.”

The FSA has told the committee that its most recent in-depth review of Northern Rock took place 18 months before the bank's near-collapse last August.

At least five of the seven staff responsible for monitoring Northern Rock have since left the regulator and last week the FSA ousted Clive Briault, the managing director of its retail business unit, who oversaw the bank's regulation. Mr Briault will leave the FSA at the end of next month.

The watchdog is expected to ask for up to 100 extra staff to help it to monitor bank risks. It is not thought likely, however, to call for a further review into the behaviour of Northern Rock's board and management team.

The Treasury committee has already released a report critical of the FSA's monitoring of the bank. “Its procedures were inadequate to supervise a bank whose business grew so rapidly,” the MPs said.

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