FSA calls for a halt on risky business


The Financial Services Authority is to unveil proposals aimed at the UK banking sector in a bid to stop a repeat of the financial crisis.

The City Watchdog is going to propose new rules on lending and also look to restrict bank's ability to take excessive risks.

The other option that may be put forward is that banks will be forced to hold more cash or liquid investments during healthier economic times to make them less vulnerable in the future.

Clearer information regarding the bank's accounts and the risks they are potentially running will also be recommended.

The FSA has pledged to be less trusting that banks are actually doing the right thing and dump the 30 year old cliché that the market is always right.

Another proposal that is likely to be covered is mortgages. Reports say that limits may be imposed on how much can be made available to potential home buyers as it is believed that in the past the 100% and 125% mortgages are responsible for over-inflating the housing market.

Stewart Baseley of the House Builders Federation commented: "House price booms are caused by an imbalance between supply and demand and the long-term solution to escalating prices is to ensure there are enough homes to meet demand, not to impose regulation that takes no account of personal circumstance or risk that could discriminate against people perfectly able to realise their ambitions of home ownership.

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