FSA 'warned' about Iceland takeover

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The former chief executive of Singer & Friedlander Group said he raised concerns with the Financial Services Authority three years before Kaupthing's collapse last October.

Tony Shearer's claims came in written evidence to the Commons Treasury select committee, which is investigating the exposure of UK investors to foreign banking crises.

Hundreds of millions of pounds-worth of British assets were thrown into uncertainty when Kaupthing Singer & Friedlander was taken into administration.

Mr Shearer has written to MPs claiming that the FSA should never have allowed Kaupthing to take over Singer & Friedlander.

He said the FSA "rushed through" approval of the deal in 2005 despite his and his colleagues' concerns.

"My short experience of Kaupthing and its management lead me to believe that they were not fit and proper people to control a UK bank," he said.

"This view was shared by most, if not all, of the other members of the Singer & Friedlander board."

He added: "I believe that the FSA had sufficient information about Kaupthing that they should never have approved the change of control, and if they were to do so they should have made extensive further inquiries."

Mr Shearer, who resigned from Singer & Friedlander in November 2005, will appear before the Treasury select committee later on Tuesday.