Building Society Legislation

Building societies are regulated by the FSA subject to legislation set out in the Building Societies Act 1986. That Act has subsequently been amended on numerous occasions, and was substantively revised by the Building Societies Act 1997 and by the Financial Services and Markets Act 2000.

The 1986 Act as now amended sets out detailed provisions in relation to -

• the constitution of building societies
• limits on raising funds other than from individuals and on lending other than fully secured on residential property, and restrictions on powers
• certain powers of the Financial Services Authority
• management of building societies, accounts and audit
• mergers and transfers of business

The 2000 Act, in so far as it is relevant to building societies, includes provisions in relation to -

• powers of the Financial Services Authority
• regulated activities
• authorisation and permission
• approved persons
• rules and guidance
• the Financial Services Compensation Scheme
• the Financial Ombudsman Service

The BSA has published a summary of the legislation affecting building societies, which you can view here:

The Building Societies (Funding) and Mutual Societies (Transfers) Act 2007 is 'enabling' - that is secondary legislation is needed to be passed by Parliament, preceded by consultation, to implement its provisions.  The three main parts of the Bill could eventually lead to

• an increase in the building society non-member funding limit to 75%
• the ranking of shareholders' and depositors' funds equally in the very unlikely event of a building society being wound up or dissolving
• an easing of the rules governing mergers between different types of financial mutuals