FSA head warns credit crisis enters most difficult stage

by Gill Montia

Story link: FSA head warns credit crisis enters most difficult stage

The chief executive of the Financial Services Authority (FSA), Hector Sants, has warned that the credit crisis is now entering its third and most difficult phase.

Speaking at the FSA’s annual meeting, Mr Sants said he expects the next phase of the events prompted by the US sub-prime mortgage crisis to include a downturn in the real economy.

He is anticipating that there will be a rise in home repossessions, as Britons struggle to keep up with their mortgage repayments.

The FSA head says the regulator will continue its bolder stance and will be clamping down on companies that fall short of full compliance, and on market abuse.

A new Supervisory Enhancement Programme should be in place by the end of the year.

Mr Sants has also asked companies to consider whether their business models will work as a new phase of the credit crisis emerges.

According to a report in The Times, the FSA may have been instrumental in recent rights issues, having told certain banks to increase their Tier one capital ratios.

It is also reported to have encouraged Alliance & Leicester to accept a £1.3 billion takeover approach from Spanish bank, Santander.