Next month Chancellor of the Exchequer Alistair Darling is reportedly set to speak at the G20 summit and call for the power for financial regulators to intervene with banks where necessary to avoid future problems such as those that cause the credit crunch.

This means that bank’s balance sheets would be closely checked to ensure their reserves are available to cover any outstanding loans.

The FSA chairman, Lord Turner of Ecchinswell, is expected to release a report next week that will show similar recommendations and back Darling’s requests.

The head of the FSA, Hector Sants, yesterday stated that he felt financial City institutions should be wary of the end of ‘light touch’ regulation.  He said:

”I continue to believe the majority of market participants are decent people. However, a principles-based approach does not work with participants who have no principles.”

He went further to add that he felt self-regulation in this area was wrong and the FSA would be looking at how banks handle risk, capital and appoint their senior members of staff.

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