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Watchdog rejects Dunfermline rap Watchdog rejects Dunfermline rap
(about 5 hours later)
Britain's financial regulator has rejected accusations that it failed to supervise the Dunfermline Building Society before its collapse in March.Britain's financial regulator has rejected accusations that it failed to supervise the Dunfermline Building Society before its collapse in March.
MPs on the Scottish Affairs Committee said the Financial Services Authority failed to issue clear warnings about the risks of the business failing.MPs on the Scottish Affairs Committee said the Financial Services Authority failed to issue clear warnings about the risks of the business failing.
However, responding to the report, the FSA said the MPs provided "no facts to substantiate this assertion". However, responding to the report, the FSA said it had given numerous specific warnings between 2003 and May 2008.
It said it gave numerous specific warnings between 2003 and May 2008. The Dunfermline said it is now stronger since the Nationwide took it over.
The Dunfermline was forced out of business by regulators last March. Its branches were taken over by the Nationwide Building Society. The takeover was agreed in March, after the Dunfermline was forced out of business by regulators.
The Treasury was reported to have taken on about £1.6bn of commercial property lending and acquired mortgage debt under the deal.
A report by the Commons committee said the watchdog's failure to supervise the Dunfermline, led to savers and investors being "unaware of the true position" of the business.
The Society's board were aware of the warnings that we gave about commercial lending and mortgage book acquisitions FSA response to the reportThe Society's board were aware of the warnings that we gave about commercial lending and mortgage book acquisitions FSA response to the report
The Treasury was reported to have taken on about £1.6bn of commercial property lending and acquired mortgage debt under the deal.
In July, a report by the Commons committee said the watchdog's failure to supervise the Dunfermline in the years running up to the takeover led to savers and investors being "unaware of the true position" of the business.
It said: "While Dunfermline Building Society chose the path of riskier lending, it cannot be said that it was given more than a general warning by the FSA."It said: "While Dunfermline Building Society chose the path of riskier lending, it cannot be said that it was given more than a general warning by the FSA."
However, the regulator firmly rejected this accusation, claiming it gave warnings to the building society sector about the risks of commercial lending in both letters to chief executives and industry speeches. However, the regulator responded with the claim that the MPs had provided "no facts to substantiate this assertion".
The FSA said it had given specific warnings to the building society sector about the risks of commercial lending in both letters to chief executives and industry speeches.
'Reviewed internally'
It said: "We note that in evidence to your committee, Graeme Dalziel, former chief executive of the Dunfermline Building Society, made clear that members of the board of the Society saw and read all relevant 'Dear CEO' letters and speeches from the FSA.It said: "We note that in evidence to your committee, Graeme Dalziel, former chief executive of the Dunfermline Building Society, made clear that members of the board of the Society saw and read all relevant 'Dear CEO' letters and speeches from the FSA.
"In addition these were reviewed internally and were discussed at board level and in the appropriate risk committee."In addition these were reviewed internally and were discussed at board level and in the appropriate risk committee.
"This clearly demonstrates that the Society's board were aware of the warnings that we gave about commercial lending and mortgage book acquisitions.""This clearly demonstrates that the Society's board were aware of the warnings that we gave about commercial lending and mortgage book acquisitions."
Jobs guaranteed The watchdog pointed out that no depositor lost money as a result of the collapse and said it was not its role to communicate specific warnings given to individual firms to building society members.
The FSA pointed out that no depositor lost money as a result of the collapse and said it was not its role to communicate specific warnings given to individual firms to building society members.
It said its chairman Lord Turner undertook a review of the FSA's actions following the failure of the Dunfermline and has consulted on new guidance for building societies, a process which had started before the collapse.It said its chairman Lord Turner undertook a review of the FSA's actions following the failure of the Dunfermline and has consulted on new guidance for building societies, a process which had started before the collapse.
Jobs guaranteed
There remain 34 Dunfermline Building Society branches in Scotland, operated by the Nationwide.There remain 34 Dunfermline Building Society branches in Scotland, operated by the Nationwide.
More than 500 workers have had their jobs guaranteed for three years.More than 500 workers have had their jobs guaranteed for three years.
However, the future of the Fife headquarters is being reviewed because of duplication with Nationwide's HQ in Swindon.However, the future of the Fife headquarters is being reviewed because of duplication with Nationwide's HQ in Swindon.
A spokesperson for the building society said it is now a very different business.
"As part of the Nationwide Group, Dunfermline Building Society is stronger than ever with a sound capital base," she said.
"We will continue to offer a first class service and competitive products to the Scottish market."