MPs have criticised the City regulator and the directors of Northern Rock for the crisis which plunged the lender into difficulties.

The Treasury select committee has blamed the Financial Services Authority for a "systematic failure of duty" in its dealings with the troubled mortgage firm.

It also attacked the watchdog for failing to spot the bank's "reckless" business plan.

The Newcastle-based firm owes the Bank of England around £24bn after problems in money market liquidity forced it to seek emergency funding in September.

That triggered the first run on a UK bank in almost 150 years as scores of savers queued up to withdraw their deposits amid fears the group was going under.

But MPs found the FSA failed to act until the credit crunch had gripped the financial system, and that Northern Rock's business model - which depended on lending rather than deposits to fuel its operations - was inadequate.

Committee chairman John McFall said: "The failure of Northern Rock, while primarily a failure of its directors, was also a failure of its regulator.

"The FSA appears to have systematically failed in its duty and this failure contributed significantly to the difficulties and risks to the public purse that have followed."

He added: "The FSA did not supervise Northern Rock properly. Its procedures were inadequate to supervise a bank whose business grew so rapidly."

The committee also claims communication needs to be improved to prevent a repeat of the panic seen on the high street, and that the role of the Bank of England's deputy governor should be beefed-up to act as the main adviser to the Chancellor in the event of future problems.

MPs also said they are worried about the lack of financial qualifications held by Northern Rock's former chief executive Adam Applegarth and chairman Matt Ridley.

They now want the FSA to conduct an "urgent review" of the credentials of senior directors at other major firms.

Liberal Democrat Treasury spokesman Vince Cable added: "Northern Rock's managers behaved like a bunch of cowboys and the FSA did nothing to rein them in, or even appear to see there was a problem."

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