The head of the City’s chief regulator has publicly apologised for its failure to prevent the banking crisis.

Hector Sants, the chief executive of the Financial Services Authority (FSA), admitted yesterday that the agency could have done more to prevent the collapse of Northern Rock and to avoid other financial disasters.

In a reference to more recent near-collapses, including Bradford & Bingley (B&B) and HBOS, Mr Sants said that the regulator regretted its failures.

Mr Sants became FSA chief executive in July 2007, just weeks before the Rock fiasco. His predecessor, John Tiner, later faced claims from MPs that he was “not asleep but comatose” to the risk. The FSA’s chairman, Sir Callum McCarthy, was last month replaced by Lord Turner of Ecchinswell.

In a speech to business leaders in Edinburgh yesterday, Mr Sants said: “It is clear that a number of banks, notably those that became dependent on wholesale funding, went into the crisis with business models ill-equipped to survive a stress of this severity, and we did not do enough to minimise this, a fact that we regret.”

Taking questions later, he said: “With subsequent events, like Bradford & Bingley, like HBOS, like RBS, we can draw from them the same lessons as Northern Rock. They’re not different lessons. We should have been putting pressure on the directors to make sure they understood their business model.

“We are sorry that our supervision did not achieve all it should have done.”

The FSA has already apologised for not doing enough to prevent the financial disaster of Rock, which was nationalised in February after being shut out of the wholesale markets, on which it relied too much.

Although Mr Sants welcomed subsequent bailout packages put together for other banks - including this week’s £37 billion proposed capital injection into HBOS, Lloyds TSB and Royal Bank of Scotland - his comments show the FSA admitting wider financial failures for the first time.

Mr Sants said the FSA had now made big changes to improve its supervisory work.

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