Federal Reserve Chairman Ben Bernanke said on Friday that innovation in credit markets must not be stifled, but complexity designed to confuse customers and drive up lending fees would not be tolerated.

The challenge faced by regulators is to strike the right balance: to strive for the highest standards of consumer protection without eliminating the beneficial effects of responsible innovation on consumer choice and access to credit, he said in prepared remarks.

Bernanke, who did not directly discuss the outlook for the U.S. economy or monetary policy, told a Fed conference on community finance that some lenders had deliberately made their products confusing to mask higher fees.

In those cases, direct regulation, including the prohibition of certain practices, may be the only way to provide appropriate protections, the Fed chief said.

(Reporting by Alister Bull, Editing by Chizu Nomiyama)

Ben Bernanke