The parliamentary spending watchdog said the Treasury had succeeded in selling the assets, but called on it learn the lessons from the process and share these across Whitehall.
Northern Rock was nationalised in 2008. In March 2015, the Treasury’s UK Asset Resolution launched a sale of its assets.
These were valued at £13bn and comprised mostly mortgages yielding over 4.5% interest, constituting the UK government’s largest ever financial assets sale.
UKAR “took advantage of good market conditions and strong investor demand” to sell Northern Rock’s loans for £13.3bn, the committee said.
But MPs were concerned by the absence of a formal business case and that alternative sale options were not valued “until very late in the sale process”.
It said the asset valuations “erred on the side of caution and the assumptions on which they were based were not well evidenced”, creating a risk that UKAR sold the loans for less than their worth.
The committee also criticised the Treasury for not considering the tax domicile of eventual purchaser Cerebus even though this could affect the sale’s value to taxpayers.
Cerberus has companies based in the Netherlands and the Cayman Islands.
The Treasury’s approach “put UK domiciled companies at a disadvantage” and the MPs said future sales should discount gains from tax avoidance that may be factored into bids.
Committee chair Meg Hillier said there are valuable lessons the whole of government can take from the strengths and weaknesses of the sale process. The Treasury must ensure these are shared, she added.
“In particular, government must put more work into establishing and maintaining solid foundations for asset sales.
“We would also like to see far greater clarity around the tax implications of proposed sales and how government will address the potential impact of these on the public purse.”
The conflict of interest issue arose over the involvement of Credit Suisse as UKAR’s financial adviser.
Its appointment “did not follow good practice” and when it becalms clear the sale would be larger than anticipated, UKAR more than doubled Credit Suisse’s fee from £2m to £4.5m without further competition.
To maximise the number of banks able to lend to bidders, UKAR then also allowed Credit Suisse to provide financing.
The committee said: “HM Treasury should ensure that departments and arm’s-length bodies have an open competition to select a financial adviser.
“Sale advisers must be independent and not conflicted through involvement in other roles on the sale (such as financing or bidding).”
MPs were also concerned that former Northern Rock customers whose mortgages were sold to Cerberus are paying more than those whose loans remain with UKAR.
This was because Cerebus had not passed on full base rate cuts to borrowers.
Hillier said: “In future sales I would like to see stronger steps taken to protect affected mortgage-holders from the impact of subsequent changes to the Bank of England base rate – in whatever direction these may be.”
A Treasury spokesperson said: “We note the publication of the PAC’s report and will respond in the normal way.”
Credit Suisse declined to comment.