Chancellor reaffirms commitment to strengthening building societies and mutuals

The Chancellor of the Exchequer, George Osborne MP, has restated his commitment to strengthening and supporting mutuals and to considering turning failed banks into mutuals. 

In a debate on 16 June, following an emergency Parliamentary question on financial services regulation, the Chancellor was asked by Rachel Reeves MP whether failed banks such as Northern Rock would be turned into mutuals with focus on long term return rather than short term profit. Mr. Osborne replied; “we (the government) are prepared to consider lots of options. Sir John Vickers’ commission is going to look at the competition in the banking industry. It has become incredibly consolidated in the past couple of years and that is not necessarily the best thing for bank customers.” The Chancellor also stated that the government needed some time before deciding how they will dispose of the shares they hold in Lloyds and RBS and how they will dispose of Northern Rock.  At present, he said, the British taxpayer would make a loss on these.  He finished his answer by stating that, “It is sensible to look at what Sir John Vickers and his commission have to say about this.”

Mr. Osborne was later asked by Jeremy Lefroy MP whether he recognised the ”importance of building societies and mutuals to the financial sector.”  The Chancellor replied; “building societies and mutuals have an important role to play in the future. We want to strengthen them and support those who want to create mutuals.” He stated that plans of how the government will do this would be set out in the next few weeks.

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Diverse building society boards

Analysis of building society boards in 2009 suggests that they are more diverse than many boards of publicly quoted companies, and show that societies draw on a wide range of professional expertise, skills and experience from a diverse set of directors to help to ensure they are run for the benefit of their members.

For example, 14.0% (13.8% in 2008) of all building society directors were female compared to 12.2% of FTSE 100 directors (11.7% in 2008), and just 7.3% of FTSE 250 directors (7.0% in 2008).

Across the UK’s 52 building societies at the time of reporting, there were 450 directors, of which 137 were executive directors and 313 were non-executives. Non-executive directors are not involved in the day-to-day running of the society, but monitor the activities and strategy of the society.

On average, each society has a board of eight or nine directors, with two or three of them being executive directors and six non-executive directors. This compares to the average FTSE 100 board which has on average more than 10 directors, with three to four of them being executive directors, and seven non-executives.

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Industry commits to improving cash ISA transfer process

The BSA has welcomed the constructive response from the OFT to the Consumer Focus super-complaint on cash Isas, and we accept the need to ensure improvements are made to ISAs to provide savers with the service standards for which the OFT is calling.

The industry has committed to make further improvements to the cash ISA transfer process and to the transparency of cash ISAs. 

The OFT report includes a number of commitments by BSA members:

•  to reduce the maximum time for cash ISA transfers from 23 working days to 15 working days and to introduce reporting arrangements that will underpin this
•  to require the new ISA provider to pay interest from two days following receipt of transfer documentation and payment from the ceding provider
•  to consider the feasibility of a fully electronic system of transfers
•  to put current interest rates on cash ISA statements in time for the 2012 ISA season.

The BSA has produced a consumer friendly guide to ISA transfers which can be viewed here

BSA welcomes new Associate

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