The report centered on a number of failings including insufficient supervision of the bank, a deficit in FSA management in overseeing the supervision and a lack of scrutiny when Northern Rock was borrowing money in the changeable market conditions
Hector Sants, chief executive of the FSA, said: "Like any organization we cannot and do not claim infallibility and we cannot, and should not, attempt to remove all the risk from the system."
However, the FSA review placed responsibility of the financial conduct of companies with the firms themselves.
"Even if supervision had been carried out at a level acceptable to the FSA, it was by no means the case that that would have changed the outcome," added the FSA.
Improvement will be focused on a specialized program to push through effective supervision methods.