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The FSA has admitted it did not "do the job properly" in the run up to the Northern Rock collapse.

Sir Callum McCarthy, the regulator's chairman, Hector Sants, chief executive and Margaret Cole, the enforcement director were in front of the House of Commons Treasury select committee on Tuesday to discuss their role in promoting financial stability.

The MPs highlighted a number of inadequate provisions on the part of the FSA including not meeting the Northern Rock board frequently enough and not recording minutes of those meetings.

In a report put before the committee the FSA agreed it had provided "a lack of sufficient supervisory engagement with the firm" in terms of staff and resources employed in dealing with the bank and poor internal monitoring of those staff.

Sir Callum told the MPs the crisis occurred "because we did not do the job properly full stop".

And Mr Sants agreed they were "absolutely clear" the way Northern Rock was handled by the FSA was "unnacceptable".

He promised action on the failings, threatening "if the standards were repeated" then "the staff concerned would not remain with the FSA", although he had been forced to admit no heads have rolled at the authority for Northern Rock.

He also admitted bonuses paid to FSA staff were at "the same percentage of total remuneration" for the last financial year as the one before.

The FSA also pledged to improve overall confidence in financial services by cracking down on market abuse and jailing culprits.

Sir Callum claimed the city "does not take market abuse seriously" and saw "longstanding problem " offences such as insider trading as "victimless crimes".

Ms Cole added bringing criminal charges must take priority over more easily won civil actions because they offer "a greater deterrent in custodial sentences".

And Mr Sants said: "We are determined to remove the misapprehension that we are somehow or other a light touch. One of the key points is to deliver criminal cases where appropriate."