Chancellor George Osborne is expected to hand greater powers to the Bank of England which would allow it to impose restrictions on the amount banks can lend.
Reforms expected to be outlined in the Chancellor’s Mansion House Speech tonight will give the Bank the power to stop banks from either lending too much or from lending to over-indebted borrowers, according to a report in The Daily Telegraph.
Specifics of the Bank’s new lending controls are to be revealed at a later date, but are thought to include restrictions on the loan-to-values available to borrowers.
Osborne is also likely to set out wider restrictions on lending to businesses.
The Chancellor is also expected to unveil plans for the Financial Services Authority to become a subsidiary of the Bank, with the creation of a new Consumer Protection Agency to regulate IFAs and a new Economic Crime Agency with responsibility for enforcement.