The Financial Services Authority (FSA) said borrowing was at an "unsustainable rate", and consumers were not being prudent enough.

In a warning to consumers, it said the effects of a "correction" in the economy could be "rapid and disorderly".

The stark message was contained in its Financial Risk Outlook 2003, an annual document which highlights risk across the financial services industry.

Consumers were also warned against the temptation of "quick-fix" products promising high returns.

	:	Debt ridden Britain
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Rapid and disorderly

The FSA said there was evidence that some people were already getting into difficulties.

According to the FSA's research, 20% of families now owe an average of more than £2,000 on credit cards.

And six million of the 30 million families in Britain are have some problems meeting interest payments.

FSA Managing Director Carol Sergeant, said: "Some consumers don't seem to be thinking ahead sufficiently prudently when deciding how much to borrow and how much to save. This could cost them dearly in the long run.

"Borrowing by consumers in the UK has been growing at an unsustainable rate, and some segments of the population are already having difficulty meeting their debt commitments.

"There is a risk that when a correction comes, it could be rapid and disorderly. The results could be lower overall economic growth, hardship for consumers, and increased credit risks for lenders.

Risk warning

In a low interest rate environment and poor stock market conditions, investors who are looking for high returns should not be swayed by "quick-fix" solutions, the FSA said.

"These products require considerable financial skills just to understand what's going on with your money.

"Few consumers have these skills and we would urge consumers to make sure they fully understand the risks involved," said Ms Sergeant.

Consumer help?

An FSA leaflet "You and your Money - taking control" is available from Post Offices today .