The Financial Services Authority, the UK regulator that has come under fire over the Northern Rock crisis, has identified a loss of confidence in financial institutions and authorities’ ability to safeguard the market as one of its top risks this year.

The FSA, which was accused last week by the UK Treasury Select Committee of “systematically failing in its duty” regarding Northern Rock, warned today in its annual Financial Risk Outlook: “Market participants and consumers may lose confidence in financial institutions and in the authorities’ ability to safeguard the financial system.