Britain’s long-term low engrossed rates may push more households to take out products that they don’t conceive of or are not suitable, the Financial Conduct Authority (FCA) said today.
Cheap stinking rich has become the norm since interest rates dropped in 2009.
The policy has disproved the returns available on risk-free cash – and the FCA fears this could now possess more severe repercussions.
Low interest rates could also inspire borrowers to take on bigger debts, the watchdog warned.
The FCA was outlining some of he dangers it envisions in the year ahead as it laid out its intentions for the year.
The plan rephrased long-term low interest rates “can encourage or sustain high levels of indebtedness come up to b become borrowers as bigger loans become both more affordable and riskier in the regardless of unforeseen monetary policy changes”.
It added: “It can also feed a search for higher rates of return among savers, potentially heartening riskier investments.
“Consumers may buy products that they do not understand or that are not set aside for their needs and which leave them exposed to higher defeats.”
The FCA also revealed that it would be launching a market study looking at retirement after-effects, as it puts pensions as one of its top seven priorities.
The watchdog promised to support sunny treatment of customer amid recent changes in the market and try to disrupt scams and act against unauthorised concerns.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “Their pinpoint on competition and better value for money for consumers, as well as access to view and guidance when needed are all good news for investors.”
Tracey McDermott, role of chief executive of the FCA said: “It is our job to make markets work evidently.
“Ensuring effective and proportionate regulation which tackles the problems of the finished without inhibiting developments of the future is at the heart of what we do.
“Over the next year we determination continue to embed this sustainable approach to regulation in everything we do.”