Building Societies Association
The FSA’s announcement that customers of merged building societies will retain their FSCS cover until 30 December 2010, is welcome. This also applies to customers of a building society which merges with a subsidiary of another mutual society and for customers whose deposits are transferred from a failed firm to another deposit taker where they already have an account.
The FSA have also confirmed that they will undertake a review of the FSCS funding model and will consult on this in 2010/11. The BSA and individual societies have raised concerns with the FSA over the current structure in that FSCS levies are unfair to less risky institutions. Over 170 MPs supported the sector’s view on the issue in a parliamentary Early Day Motion. Whilst the FSA’s review is welcome, the timescales set out are disappointing.
The FSCS review will cover:
- the structure and composition of the classes in the FSCS funding model;
- the annual thresholds each class can be asked to pay;
- the allocation of levies among different types of firms and the limits that apply to different types of FSCS levy;
- the method of apportionment of levies to individual firms, including considering the case for risk-based levies; and
- the treatment of both new entrants to the industry and those firms leaving
the industry.
