A senior manager at the Financial Services Authority has accused building societies of making fundamental errors during the credit crisis, saying they ignored repeated warnings over lending practices and inadequate risk management.

The criticisms were made at the Building Societies Association annual conference in Harrogate by Nick Lock, manager of the FSA’s retail firms division, in a speech that was read out by Hugh May, a spokesman for his department.

Mr May said: 'We have seen unsustainable margins on prime lending, over-ambitious growth targets and a risk appetite that was too great. Riskier lending was fundamentally mispriced and there was inadequate investment in risk management.'

He said the FSA had warned building societies “over and over again” about their lending practices but 'clearly not everyone was taking note'.

The Times