View more on these topics

Turner calls for new watchdog to block credit during bubble

FSA chairman Adair Turner has called for the creation of a new official body with powers to force banks to curb lending during financial bubbles.

Turner told the BBC at the World Economic Forum in Davos that he sees the new body as a macro prudential committee, sitting between the Bank of England and the FSA.

It would push up the cost of lending for banks to commercial property businesses by forcing banks to hold more capital relative to their property loans if prices increase too quickly.

He said that a similar approach would apply to the mortgage market if house prices were rising too quickly, where the committee could force banks to reduce their loan to value limits.

He said: “I think we have got to return to saying there is a new policy lever that we need and it addresses the issue of the quantity of credit being extended in the economy and in particular to those sectors which are most likely to be subject to asset price and credit cycles.”

Bill Warren Compliance managing director Bill Warren believes that Turner’s calls are anti-consumer, anticompetitive and would add to problems for the mortgage industry.

He says: “This all comes back to the FSA’s supervision of lenders. It needs to make sure lenders’ risk policies and LTVs are sensible, rather than artificially reducing lending.”

Recommended

1

Lifemark clients wait for bond decision

Over 20,000 clients with Keydata plans invested in Lifemark have been left in limbo after news that Lifemark is seeking to change its bond terms and conditions to avoid paying interest. On Monday, Lifemark’s board of directors submitted an application to Luxemburg regulator, the Commission de Surveillance du Secteur Financier, to restructure its debt by […]

3

Split over outlook for Difs after the RDR

Skandia UK chief development officer Peter Mann has warned it is difficult to see how distrib-utor-influenced funds will be able to operate following the retail distribution review. Mann says Difs are at odds with the RDR drive to separate distributor from manufacturer. He says: “The fact that they are distributor-influenced clearly has some kind of […]

Why your clients need some tough love

In any relationship that matters, professional or personal, you should be upfront with someone if you think they’re making a decision or doing something they might later regret. Being honest with someone and having their best interests at heart, however hard the message, is key to building trust in any relationship. So how does this […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment