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MPs stick the boot in to the FSA

The FSA (Financial Services Authority) has had what you may call "a bad day at the office" today after receiving severe criticism from MPs regarding the handling of the Dunfermline building society collapse. Despite receiving the backing of Gordon Brown on numerous occasions, the FSA today took a battering from the Scottish affairs committee with serving MPs queueing up to criticise the whole affair.

While the FSA was not directly at fault when the Dunfermline building society collapsed, with management rightly taking much of the blame, there is a feeling that various warnings given to the Dunfermline management were weak and lacked direction. There is also concern that savers, who held over £1 billion with the society, were not warned about the situation at any time and were effectively kept in the dark.

The FSA readily admits that the Dunfermline building society rescue could have been smoother but there are concerns that simple mistakes were made which eventually proved very costly. As we know, the UK government was forced to take on £1.6 billion of the society's more risky liabilities with the retail network passed over to Nationwide with the government also offering a financial subsidy.

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