Industry response

FSA consultation paper, “Regulated fees and levies: Rates proposals 2012/13”, CP 12/3

BSA response

Introduction

The Building Societies Association represents mutual lenders and deposit takers in the UK including all 47 UK building societies. Mutual lenders and deposit takers have total assets of over £375 billion and, together with their subsidiaries, hold residential mortgages of over £235 billion, 19% of the total outstanding in the UK. They hold more than £250 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for 34% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

Executive summary

We express our members’ concern at another significant increase in the FSA’s annual funding requirement. - over five years it has risen 92.7%. The building society sector, by contrast, has reduced its management expense ratio by more than a third over the past fifteen years.

We are particularly concerned at the cost of the Money Advice Service. Not only has the budget for the money advice part of the service risen by an above inflation 5.9%, but also the costs for the debt advice part have been passed on to deposit takers and home finance providers without consultation. Problem debts arise from many additional sources including utility charges, and personal tax and council tax, as well as from mortgages, credit cards and current accounts. Why are these other creditors not sharing the burden of financing debt advice ? We find loading the entire cost on to fee-blocks A1 and A2 disproportionate and unacceptable.

Adding to BSA members’ financial burden is the move to recover a greater proportion of overall expenditure from the deposit taker category which affects all of our members. In 2007/08, the A1 category contributed 18.9% of the annual funding requirement; by 2012/13 this has risen to 30.6%. We understand that enhanced supervision is targeted at the larger and systemic firms and note that the premium fee is designed to capture that – which we support. But mutuals still appear to be paying for the mistakes made by the now nationalised big banks and failed demutualisers.

Download the full response

Members and associates may read the policy brief on fees here:

BSA policy brief on regulatory fees and levies