Most of the officials at the Financial Services Authority (FSA) who were directly responsible for the flawed supervision of Northern Rock have quit, The Times has learnt.

Of the seven FSA supervisors working closely on the bank before its implosion last August, five have left, the FSA has admitted, responding to a Freedom of Information Act request from this newspaper.

The FSA, the body responsible for ensuring that UK banks have strong-enough balance sheets and sufficient liquidity, has come under fire for failing to spot the fatal flaw in Northern Rock's business model. The FSA is expected to admit to shortcomings in its supervision of the Rock in a report this month. Hector Sants, the chief executive, has already admitted to MPs that the FSA's performance was unacceptable and that there were failings. Northern Rock's extreme dependence on the wholesale money markets, rather than on depositors, for its funding proved a catastrophic weakness when the credit crunch hit last summer, leading to the first run on a British bank for more than a century.

The ensuing government rescue and nationalisation, with taxpayers underwriting £100 billion of loans, is seen as one biggest financial disasters of recent times. Although the chairman and the chief executive of Northern Rock quit, no minister or regulator has resigned publicly over the affair.

Mr Sants has denied that the report, under the auspices of Rosemary Hilary, the FSA's internal auditor, will be a whitewash, although he says that some details will be held back to protect the legal rights of employees and to respect the confidentiality of competitor banks examined for purposes of comparison.

None of the departing FSA officials appears to have been dismissed, because none was paid compensation for loss of office, according to the regulator. It is thought that one leader of the Northern Rock team departed after being passed over for promotion.

The seven unnamed officials worked on Northern Rock in the 19 months before its disaster. Some are thought to have left the FSA before the catastrophe, and high turnover of FSA staff may have been one of the reasons for the failings. Northern Rock had not been the subject of a full supervisory health check for 18 months when it imploded, the FSA admitted to MPs.

Northern Rock came under the auspices of the FSA's retail division, headed by Clive Briault. Within that division, David Strachan was responsible for supervising big retail firms. Mr Sants's predecessor, John Tiner, a former FSA chief executive, left last July, only days before paralysis hit the credit markets, leading to the failure of Northern Rock. The FSA declined to comment further.

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