FSA wants to get tough

I have a real problem reconciling the tough talk coming out of the FSA with the Treasury's desire to see credit growth return to the happy days before the bubble burst.

Financial regulators may in the future ban financial products if they are too risky or too complex, Lord Turner, chairman of the Financial Services Authority, said today. Indicating that the City regulator is embarking on a dramatic change in the "philosophy" of its approach to overseeing firms, Turner said his review into regulation due next month would lead to a "banking revolution".

He said banks would be expected to put "several times" more capital aside for the risky positions held in their trading books – one of the lessons learned from the current financial crisis.