Treasury has 'limited grasp' of shadow banking sector risks, peers say

The UK Treasury has a “limited grasp” of concerns linked to the booming shadow banking sector and may not be prepared for the risks the unregulated industry poses to financial stability, peers have said.

- Kalyeena Makortoff

While a lack of data made it hard to say whether the global $16tn (£12tn) non-bank financial sector could bring the financial system to its knees, officials did not seem to be alive to the potential risks, according to a Lords financial services regulation committee report.

It said the Treasury’s evidence had shown a “limited grasp” of the concerns raised in the inquiry, suggesting “passivity in the face of potential risks to the UK’s financial stability”.