Senior executives at the Financial Services Authority (FSA) are heading for a grilling today when they appear before MPs to answer questions about their role in the banking crisis.

Lord Turner of Ecchinswell, chairman of the City regulator, and Hector Sants, chief executive, will face the Treasury Select Committee.

They are expected to have to field questions about their alleged failings in the run-up to the Icelandic banking crisis, which left about 10,000 savers on the Isle of Man fearing for their savings.

They will have to explain a claim by Tony Shearer, a whistleblower and former chief executive of Singer & Friedlander, that regulators ignored his warnings that executives at Kaupthing, the Icelandic bank that took control of his investment firm in 2005, were not fit and proper owners.

A second alleged whistleblower, Paul Moore, the former head of regulatory risk at HBOS, also claimed that he gave warning years ago about excessive risk-taking at the bank, which is now 43-per cent owned by the taxpayer.

Mr Moore's claims, detailed at previous select committee hearings, led to the resignation last month of Sir James Crosby, the FSA's deputy chairman and the former chief executive of HBOS.

The FSA has defended its actions at HBOS, stating that it fully investigated allegations made by Mr Moore and was satisfied by changes introduced by the bank.

It has admitted failures of oversight at Northern Rock, the Tyneside lender that has been fully nationalised.

Mr Sants and Lord Turner, who joined the FSA late last year, have said that the regulator has learned big lessons from the past and is ready to move on.

John McFall, chairman of the committee, accused regulators of being "asleep at the wheel" in the run-up to the crisis at the Rock.

Members of the Committee have also questioned whether the tripartite role of regulators, which involves the Bank of England, Treasury and FSA, co-ordinating their decision-making, needs to be completely overhauled.

In further questions for Lord Turner and Mr Sants, regulators on the Isle of Man have pointed the finger at the FSA over the transfer of up to £500 million from the local subsidiary of Kaupthing Singer & Friedlander, to London shortly before the Icelandic banking crisis took hold.

These assets were left frozen last October when Gordon Brown pushed several British subsidiaries of Icelandic banks into administration. Regulators say they were acting on FSA advice.

They claim that a memorandum of understanding between regulators, which would normally have led to the Isle of Man being tipped off about the UK Government's planned actions, was ignored.

Lord Turner and Mr Sants are also likely to be asked about measures they plan to introduce, including a proposed crackdown on the City's bonus culture, to help prevent a banking crisis taking place again.

Lord Turner is close to finalising a sweeping review of the role of the regulator. It is expected to be published next month and contain detail about proposals by the FSA to curb "rewards for risk-taking".

Appearing today alongside the two regulators is Loretta Minghella, the chief executive of the Financial Services Compensation Scheme (FSCS).

The FSCS, which steps in to guarantee savers' cash in a crisis, has had to intervene in several bank catastrophes, including the part-nationalisation of Bradford & Bingley.

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