It is official FSA can't regulate banks.

The Financial Services Authority (FSA) has admitted regulatory failings over the UK
mortgage bank Northern Rock. Apparently, the FSA thought that the Bank of England would do more to support banks, when interbank lending froze up during the summer of
2007.

The small fry have been toasted with five of the seven member team directly supervising Northern Rock leaving. However, other main factors were the dithering of the UK Treasury and the Bank of England governor worrying about moral hazard.