FSA says it is too busy to take on credit role

THE Financial Services Authority said yesterday it did not have the ability to police the booming world of consumer credit.

This will disappoint groups concerned that lenders are charging far too much for loans to cashstrapped borrowers.

FSA chairman Sir Callum McCarthy insisted his organisation was busy enough regulating mortgages and general insurance.

Testifying before Parliament’s Treasury Select Committee, he said the watchdog had its work cut out policing the 14,000 firms under its umbrella.

‘Giving the FSA responsibility for consumer credit would mean we would have to take on another 100,000 licensees,’ he added.

The financial regulator said it was threatening mortgage lenders with possible fines if they failed to give customers full information about their products. A ‘mystery shopping’ exercise had found lenders were still not distributing all the documents they should under new rules.

But the FSA was criticised by the committee for failing to clamp down fast enough on firms mis- selling products.

Among these were Payment Protection Insurance (PPI) funds, which cover debt repayments if a client misses work or has an accident.

Committee chairman John McFall said that firmer and swifter punishments were necessary.