FSA chairman Adair Turner says the regulator is “crawling all over” lenders’ practises in the commercial real estate sector.
Speaking at a Treasury select committee evidence session on the MMR today, Turner said while the FSA does not regulate the sector through conduct regulation, it has started to look at how it can monitor banks operating in this sector through prudential regulation.
When asked if the FSA is looking at how banks lend in this sector, Turner said: “We are crawling all over it but I think the nature of commercial real estate means it does not give itself to a set of rules.
“But what I can absolutely assure you is that on the prudential side the issue of commercial real estate lending is now, and will be in the future, a key focus of the PRA and the FPC.”
Turner admitted the FSA has not paid enough attention to the issue in the past.
He said: “The perfectly reasonable question raised by the HBOS document that came out last week, which tells a terrible story of bad lending in commercial real estate and bad controls, is what was the FSA doing? We were not doing enough.”