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UK Financial services regulator says era of cheap credit may be over for good

UK Financial services regulator says era of cheap credit may be over for good

The head of Britain's financial services regulator warned on Wednesday that the era of cheap credit may be over for good.
Financial Services Authority Chief Executive Hector Sants said that he believed financial markets will never return to the practices prevailing before the global turbulence sparked by the collapse of the U.S. subprime mortgage market last summer.
Sants said that banks will likely back away from the innovative products which allowed them to package and sell on loans cheaply, and will instead return to the old methods of getting to know customers and forging long-term relationships with them.
"I don't think markets are ever going to return to the way they were," he told British Broadcasting Corp. radio. "The idea that at some point they will go back to normal, I think, is a misnomer."
Sants said some more complicated products would still be available, "but probably using simpler and more understandable vehicles which investors who are buying this dispersed risk can have greater confidence in."
That meant that the costs of borrowing for consumers was likely to rise, he said.
"There is this issue that this strategic rebalancing may further affect the availability and price of credit, but from a regulators point of view that is not necessarily a bad thing," he said. "Easy credit is not necessarily good for either consumers or the economy in the long term."


Updated : 2021-04-17 17:14 GMT+08:00