Following the loss of billions of pounds in the global credit crisis, a damning report by Britain’s MPs urges the country’s financial regulator and its central bank to develop a better way of warning banks and investors of high risks.
In the report, the Commons Treasury Select Committee criticises the Financial Services Authority (FSA) and the Bank of England (BoE) for failing to ensure financial companies were prepared for the worldwide closure of credit markets, The Times reports. The government must respond to the charges within two months.
‘It is clear that many market participants failed to heed warnings about a serious underpricing of risk and the potential for impaired liquidity in financial markets in the mistaken belief that the good times would go on and on,’ John McFall, committe chairman, said:
The committee will recommend that, in future, the regulator and the bank should write a letter to financial companies, highlighting two or three key risks. The MPs believe the two institutions should then seek confirmation the companies have considered the risks and publish a commentary on the responses.
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