The former deputy chief executive of Northern Rock, David Baker, has been fined £504,000 and banned from the sector for life by the Financial Services Authority after it ruled he hid the scale of the debt problems facing the bank before it collapsed in September 2007 as the first high profile victim of the credit crunch. The watchdog has also fined three firms a total of £4.2 million - Credit Suisse, Getco and Instinet - for failing to provide accurate and timely transaction reports.

The record half million fine and lifetime ban imposed on David Baker is the biggest sanction ever against a High Street banker by the FSA. The old deputy at Northern Rock, who left the bank in May 2008, was punished for concealing almost 2,000 'bad' mortgages in January 2007, in collusion with fellow executive Richard Barclay, to make the bank look more stable than it actually was to shareholders and the public. Mr Barclay was in charge of credit risk at the Rock's bad debt unit, an oxymoron of a title as it turned out, and was fined £140,000 by the FSA for his part in the deception.

Baker and Barclay both failed to meet the high standards we require of senior individuals," explained the FSA's head of enforcement, Margaret Cole. "They held senior positions of trust but provided inaccurate information to the Northern Rock board and to the market. This is a loud and clear message that we are serious about taking action where directors cross the line."

The investigation revealed that then chief executive and ex-grocer Adam Applegarth, was kept in the dark about the discovery of 1,917 mortgages to borrowers in January 2007, which were either three months in arrears or had already been repossessed. If they'd been included in company reports, as they should have been, the bad debt mortgage figure at the now nationalised institution would have 50 per cent higher.

In the other recent case, involving Credit Suisse, Getco Europe and Instinet Europe, the FSA fined the three firms £1.75m, £1.4m and £1.05m respectively, after each was found guilty of transaction reporting failures on the financial markets. The bank failed to notify the regulator properly about all 30 million trades it made on the London Stock Exchange from November 2007-2008, plus it inaccurately reported 10 million trades across all asset classes. The electronic market maker (Getco) didn't report 46 million trades correctly and the agency broker (Instinet) inaccurately reported 22 million trades. The FSA said that all three firms could have prevented the multiple breaches by undertaking regular data reviews and despite repeated reminders to do this during the 2007-2008 period, none of them did. The firms would, of course, have been busy dealing with the banking crisis at the time.

Firms are however required to have adequate systems and controls in place to ensure they can submit accurate information about reportable transactions by the close of business the day after a trade is executed, regardless of the economic circumstances. The FSA uses this data to search for insider trading and market manipulation.

Commenting on the £4.2m fine levied against the three institutions, Alexander Justham, director of markets at the FSA, said: "Firms must meet their obligation to provide accurate and timely data. Without it we cannot properly detect and investigate market abuse, identify market wide risks, or have a comprehensive understanding of the activities of firms. This data is vital in our efforts to combat financial crime and we will continue to pursue companies that fail to provide it."

Each firm has taken steps to improve their processes and resolve the errors, resubmitting reports to the FSA where necessary. By co-operating with the inquiry the firms qualified for a 30 per cent discount; without it the total fines would've been £6m.

• In other news, the FSA announced that it is fining Kensington Mortgage Company £1.225m for its unfair treatment of certain customers in mortgage arrears. An estimated £1m will also be paid out for customer redress.

The FSA identified a number of serious failings by Kensington which occurred between 1 January 2007 and 31 October 2008 in contravention of its Treating Customers Fairly (TCF) retail guidelines. The contraventions included:

• Failing to ensure mortgage servicing staff acting on its behalf had adequate understanding of treating mortgage arrears customers fairly
• Concentrating on the repayment of mortgage arrears over a short period of time rather than agreeing an arrangement to pay the arrears based on the customer's individual circumstances
• Applying three charges to customers' accounts that were unfair and/or excessive. Specifically these were:
- A fee for a returned direct debit which was charged regardless of how many times the direct debit had already been returned unpaid;
- An excessive fee for cancelled direct debits which did not reflect administrative costs;
- An early repayment charge on mortgage balances which included arrears fees and charges within that balance.

The firm also failed to take reasonable care to organise and control its affairs responsibly and effectively, and to ensure adequate risk management systems. Its management information focused on the performance of the firm's mortgage book and the profitability of the business, rather than on treating customers fairly.

The FSA took into account that Kensington has made significant improvements to its arrears and repossession processes since the early part of 2008, qualifying if for a 30 per cent discount from the original £1.75m fine.

Margaret Cole, director of enforcement and financial crime, said: "This case should serve as a strong reminder to firms dealing with retail customers, especially customers in a vulnerable position such as those with mortgage arrears, that the FSA will take robust action where it sees that customers are not treated fairly. Retail firms which fail in their obligations to customers should expect not only a substantial fine but also that they will have to pay back customers who have been disadvantaged."

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