FSA: Dark clouds of debt gathering

In a statement, the FSA warned financial institutions to be ready as “clouds were already darkening” due to rising unemployment levels that will lead to many people falling behind on their debt repayments.

In particular, those with high levels of debt, especially if secured on their homes, could find themselves facing possible bankruptcy and repossession if they build up arrears.

Clive Briault, managing director of retail markets at the FSA, explained: “While retail banks appear to have adequate financial resources today, the good times will not last forever – indeed, there is evidence that the clouds are already darkening and that banks need to prepare now for the potential storms ahead.”

His comments come as the governor of the Bank of England gives a warning that people are struggling with their debt management, adding to fears that Britain may soon reach a crisis point.