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News in digestible form
Welcome to the November edition of our e-newsletter, BSA Newsbite. A monthly online update, Newsbite gives you the latest news, views and stats from the building society sector.
The Winter edition of Society Matters will be published shortly. This edition is a mortgage and housing policy special. To request a postal copy and to be added to the distribution list click here
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Cash Child Trust Fund balances reach nearly £400 million
Cash Child Trust Funds (CTFs) have remained popular with total balances approaching £400 million at the end of quarter three 2008. The number of cash accounts opened in the third quarter of this year is up by around 7,000 compared to the same quarter in 2007. Where they are offered a choice, parents, perhaps unsurprisingly, appear to value the lower risk of cash CTFs, as opposed to Stakeholder CTFs where funds are invested in the stock market, as the FTSE 100 finished October 2008 35% lower than a year earlier.
A recent report issued by HMRC shows that 75% of parents have actively opened accounts for their child. Although this figure is encouraging, it still means that a quarter of parents are not investing their child’s voucher within 12 months of receiving it - instead they are leaving the Government to invest the voucher on their behalf in a Stakeholder account. This means their child is missing out on valuable interest or investment growth for that 12 month period. We would encourage parents to act quickly when they receive their vouchers so as to get the best return for their child.
Read the full article
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Dormant Accounts Act receives Royal Assent
The Dormant Bank and Building Society Accounts Act – the legislation that will underpin the Unclaimed Assets Scheme, due to come into force mid-2009 – received Royal Assent this week. The BSA has worked closely with HM Treasury on the Unclaimed Assets Scheme and welcomes the Act.
The aim of the Scheme is to promote the transfer of dormant account monies to charity. The Act provides for money in accounts which have been dormant for 15 years or more to be handed over to a Central Reclaim Fund, and any money that is not reclaimed by customers will be transferred to the Big Lottery Fund for distribution to charities. The charities designated by the Government to receive the money are those in the fields of youth services, financial inclusion and financial capability.
A key feature of the legislation is that it preserves the right of customers with dormant accounts to reclaim their money at any point in time – even after it has been transferred to the Scheme.
The Act also allows an alternative scheme for building societies (and banks) whose assets are less than £7 billion. Under this definition 50 of the 59 building societies would be able to use the alternative scheme. These societies will be able to choose to distribute funds directly to a charity of their choice, instead of via the Big Lottery Fund. This could be one that the building society considers it has a special connection with or which will apply the money for the benefit of members of communities that are local to the branches of the society. The alternative scheme recognises that societies support good causes in the communities from which their members are drawn.
In January this year, the BSA, BBA and NS&I launched a free, ‘one-stop-shop’ website for tracing building society, bank and NS&I accounts - www.mylostaccount.org.uk. In the first six months of the website alone, 140,000 individuals searched online for their forgotten funds.
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News in brief
Changes in FSCS coverage for building society mergers
The FSA announced that is introducing a rule change which will enable a building society which merges with another society to keep its separate compensation limit, if both brands are retained.
Adrian Coles, BSA Director-General said: “This announcement means that where a saver has accounts with two merging societies – and both brand names are retained – they will be protected at £50,000 per brand. For joint accounts this will be £100,000 per brand. This is a very welcome, sensible move.”
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BSA welcomes FSA arrears announcement
The Financial Services Authority has written to the chief executives of all mortgage lenders and mortgage administrators giving them until January 31 to ensure that their customers facing arrears are being treated fairly.
Adrian Coles, BSA Director-General said: “Building societies welcome the FSA’s announcement – with arrears forecast to increase over 2009, it is essential that all lenders ensure that their arrears and repossession policies treat customers fairly."
Read full story
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Society news
On Monday 1 December 2008, Nationwide Building Society will merge with Derbyshire Building Society. The Derbyshire name and branches will be retained. The Nationwide’s merger with Cheshire Building Society will take place on 15 December, subject to FSA confirmation. The Cheshire’s name and branches will also be retained.
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Don't forget the Mutuals Forum 2008
Taking place on 4 December 2008 at the Emirates Stadium, London, this event has been designed for mutuals of all types. The day include presentations on the state of the sector, selling the benefits of mutuality, launch of the mutuals year book and parliamentary question time.
For more information download the brochure and booking form here and full programme here
And finally ...
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For feedback, opinions and information, contact Newsbite’s editor Rachel Le Brocq.
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