Britain’s banks have criticised the Financial Services Authority for being overly cautious. It is reported that several leading institutions in the City are receiving messages on a regular basis, sometimes even daily, encouraging them to set aside liquid assets to protect them from the market turbulence, rather than lending the funds to borrowers. Leading banks have claimed the FSA’s cautious approach has inhibited any chances of a market recovery, with one source reportedly claiming the FSA have been ‘heavy handed’ in their approach.
It isn’t the first time the banking authorities have been accused of being slow in assisting the market conditions, with banks previously alleging that the Bank of England and the FSA need to do more to help improve their financial situation. Those claims were followed by April’s £50 billion liquidity scheme, offering banks the chance to swap mortgage backed assets for government bonds . However, whilst the banks felt that this was a necessary step to assist their recovery, and thus improve the conditions of the financial market, some commentators criticised the move for bailing out the banks.
A Treasury spokesperson defended the FSA’s position, asserting that banks must take steps to build up a capital reserve.
British Banks Criticise Cautious FSA
Financial Services > e-banking > Banking news
British Banks Criticise Cautious FSA
Wed, 09 Jul 2008
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