Media and Public Affairs
Treasury Select Committee (TSC) Inquiry - mortgage arrears and access to mortgage finance
The TSC has launched a new Inquiry into mortgage arrears. The terms of reference, amongst other issues, include:
- the treatment by, and the approaches taken, by mortgage lenders towards homeowners in arrears and/or at risk of repossession, including issues relating to the treatment of homeowners by financial institutions specialising in mortgage lending to sub-prime borrowers
- the success of those Government schemes in existence before the financial crisis to support homeowners facing difficulties with mortgage payments and/or at risk of repossession, as well as the effectiveness of initiatives introduced since the financial crisis began; and
- the impact of the credit crunch on access to mortgage finance and the terms on which such finance is offered for first time homebuyers.
The Association submitted written evidence and the Director-General appeared before the Committee on 30 June, along with representatives from the CML, BBA, IMLA and NLA. When questioned why societies had not signed up to the Government’s Homeowner Mortgage Support scheme, the BSA said societies already had generous and more flexible forbearance schemes available to their members and the administration surrounding the scheme was both complex and time-consuming. The Director-General noted, however, that the publicity from the scheme had encouraged customers talk to their lender, which is a positive step forward. The session can be viewed on Parliament TV here http://www.parliamentlive.tv/Main/Player.aspx?meetingId=4451
On the same date, Vincent Cable MP, led a Westminster Hall debate entitled Government programmes to assist people facing repossession and mortgage arrears. The Association sent a briefing to Dr Cable ahead of the debate detailing the building society approach to arrears handling. The debate can be viewed on Parliament TV here, along with the full Hansard transcript http://news.parliament.uk/2009/06/mps-debate-on-helping-people-facing-repossession/
Lords Committee echoes building societies’ concerns on FSCS levies
The House of Lords Select Committee on Economic Affairs has echoed the sector’s concerns on disproportionate Financial Services Compensation Scheme levies and called on the Government to make the scheme fairer for building societies.
In its report published on 2 June, Banking Supervision and Regulation, the Committee said “Some inequity in the levies charged by the Financial Services Compensation Scheme is inevitable. The current scheme is nevertheless clearly unfair to institutions which, like the building societies, are constrained from the riskiest business. It is also a potential source of destabilising moral hazard. The Government should promote changes to ensure that contributions to the FSCS should be at least broadly related to the riskiness of the business in which regulated firms engage. In particular, it should consider the introduction of a different basis for calculation of the levy on mutual building societies, or the creation of a separate depositor protection scheme for building societies.”
The BSA welcomes the Committee’s support, which follows appearances in front of the Committee by the Association’s Director-General and Chief Executives of Nationwide and Norwich and Peterborough building societies.
Scottish Affairs Select Committee evidence session into Dunfermline Building Society
The Scottish Affairs Committee took oral evidence from representative of Dunfermline Building Society (DBS) – Graeme Dalziel, former Chief Executive, Jim Faulds, former Chairman, and Jim Willens, former Chief Executive.
The witnesses acknowledged that the downfall of the Society was the fault of the Board. They did, however, dispute that they had had “repeated warnings” from the FSA over their commercial lending practices. When asked why the sector had not come to the rescue of DBS, they noted that a group of societies had been prepared to provide capital of £30 million, on the provision that the Treasury inject the remaining £30 million required. Representatives from DBS said they believed “all the other societies faced similar problems to those we faced”.
The FSA, HM Treasury, Bank of England and representatives from Nationwide Building society also gave evidence to the Committee. The full transcript of this session can be viewed here http://www.publications.parliament.uk/pa/cm200809/cmselect/cmscotaf/uc548-ii/uc54802.htm
Draft legislative agenda
The Government set out its draft legislative agenda on 29 June. Bills of interest to the sector include Financial Services and Business Bill. The Bill’s purpose is as follows:
Promoting stability, efficiency and competition in financial markets, taking action to reduce the frequency and impact of systemic financial crises and promoting efficiency and competition by:
- Renewing financial regulation including strengthening regulation (including to cover all important institutions) to reduce the systemic risk of markets and to enable a wider approach to regulation;
- Protecting and supporting consumers to boost financial capability and tighten up consumer-focused regulation. In particular to enable spending on a national money guidance service;
- Improving efficiency and competition in financial markets including considering ways to strengthen the diversity of market participants, as well as action to maintain the competitive position of the UK as the leading global financial centre;
- Toughening regulation of the financial system to ensure that the Financial Services Authority (FSA) has sufficient powers to do its job. For example, the Government is examining powers to:
- suspend individuals or firms for misconduct or to penalise individuals who should have sought approval to perform a controlled function but did not do so;
- freestanding powers to take certain emergency actions for the purposes of financial stability, including placing restrictions on short selling and requiring disclosure of short selling;
- strengthen the FSA’s statutory objective and governance in respect of consumer education;
- Banning unsolicited credit card cheques – these cheques contribute to drawing people further into debt than they intended to go by making accessible a form of credit which often attracts higher interest rates than card purchases; can carry a handling fee and can come without the protections available when using credit cards themselves. The Government will be consulting on the proposed framework of a ban shortly in the context of the upcoming Consumer White Paper.
It was also confirmed that the Equality Bill is to be re-introduced in the new Parliamentary session.
Alongside the legislative agenda, the Government published Building Britain’s Future. The document outlines action to move the UK out of recession and document summarises much of the work the Government has already undertaken on financial stability and arrears and possessions. It also pledges to expand housebuilding by investing a further £1.5 billion over the next two years to deliver 20,000 additional energy efficient, affordable homes to rent or buy.
There is reference to a planned consultation on a new social investment wholesale bank - although no mention of whether this would receive dormant accounts money.
