Policy
Response
BSA response to FSA Consultation Paper 09/16 - Financial Services Compensation Scheme: Verification of the Single Customer View
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Contact: Brian Morris Date: 10 Sep 2009 |
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The BSA welcomes the opportunity to respond to the proposals in chapters 2 and 5 of CP16. We have previously submitted to the FSA the BSA’s views on chapters 3 and 4 of the CP.
The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 52 UK building societies. Building societies have total assets of over £370 billion and, together with their subsidiaries, hold residential mortgages of over £245 billion, more than 20% of the total outstanding in the UK. Societies hold nearly £240 billion of retail deposits, accounting for more than 20% of all such deposits in the UK. Building societies also account for about 36% of all cash ISA balances. Building societies employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
Chapter 2: Single Customer View verification
The BSA has expressed strong reservations about the FSA’s plans for faster payout of compensation, and the single customer view (SCV) forms a central part of that. CP 09/16 was published in June and, in the meantime, the FSA confirmed in July in Policy Statement 09/11, that it will be proceeding with its plans for faster payout and the SCV. Accordingly, in preparing this response, we have assumed that the SCV requirements will be implemented on the basis set out in Policy Statement 09/11.
The BSA recognises the need for some form of verification of the SCV and we think the proposals set out in CP 09/16 are, broadly, reasonable. However, we have the following comments.
The introduction of a SCV will necessitate significant systems developments by building societies, which will require careful planning. It is important that the detailed specification of the SCV is finalised and made available to building societies at an early stage. If there is any delay in this, it is possible there will be knock-on slippage in the timing of the main milestones envisaged by the FSA, including the 30 June 2010 delivery of deposit takers’ pre-implementation reports.
It is important that the process leading up to the introduction of the SCV requirement is one of open dialogue between FSCS and deposit takers. In particular, we would expect periodic updates from the FSCS on the progress of its own systems development.
We note that the FSA envisages that, as part of the verification process, live customer data will need to be shared with the FSCS. It is of paramount importance that complete confidentiality of this data is ensured and we will be looking for reassurance from FSCS on this.
The FSA’s timetable envisages that FSCS will require six months to consider and sign-off deposit-takers’ SCV systems. It is not clear why such a long period will be needed. If this is due to constraints on FSCS capacity, then might it not be better for submission of SCV data to be tranched, so as to avoid all deposit-takers submitting data at the same time?
Chapter 5: Changes to FSA rules to reflect the Banking Act 2009
We are content with the changes that are proposed in this Chapter and note that they will have no policy impact.
The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 52 UK building societies. Building societies have total assets of over £370 billion and, together with their subsidiaries, hold residential mortgages of over £245 billion, more than 20% of the total outstanding in the UK. Societies hold nearly £240 billion of retail deposits, accounting for more than 20% of all such deposits in the UK. Building societies also account for about 36% of all cash ISA balances. Building societies employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
Chapter 2: Single Customer View verification
The BSA has expressed strong reservations about the FSA’s plans for faster payout of compensation, and the single customer view (SCV) forms a central part of that. CP 09/16 was published in June and, in the meantime, the FSA confirmed in July in Policy Statement 09/11, that it will be proceeding with its plans for faster payout and the SCV. Accordingly, in preparing this response, we have assumed that the SCV requirements will be implemented on the basis set out in Policy Statement 09/11.
The BSA recognises the need for some form of verification of the SCV and we think the proposals set out in CP 09/16 are, broadly, reasonable. However, we have the following comments.
The introduction of a SCV will necessitate significant systems developments by building societies, which will require careful planning. It is important that the detailed specification of the SCV is finalised and made available to building societies at an early stage. If there is any delay in this, it is possible there will be knock-on slippage in the timing of the main milestones envisaged by the FSA, including the 30 June 2010 delivery of deposit takers’ pre-implementation reports.
It is important that the process leading up to the introduction of the SCV requirement is one of open dialogue between FSCS and deposit takers. In particular, we would expect periodic updates from the FSCS on the progress of its own systems development.
We note that the FSA envisages that, as part of the verification process, live customer data will need to be shared with the FSCS. It is of paramount importance that complete confidentiality of this data is ensured and we will be looking for reassurance from FSCS on this.
The FSA’s timetable envisages that FSCS will require six months to consider and sign-off deposit-takers’ SCV systems. It is not clear why such a long period will be needed. If this is due to constraints on FSCS capacity, then might it not be better for submission of SCV data to be tranched, so as to avoid all deposit-takers submitting data at the same time?
Chapter 5: Changes to FSA rules to reflect the Banking Act 2009
We are content with the changes that are proposed in this Chapter and note that they will have no policy impact.
