Call to take Rock back to its roots
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The BSA wants the government to consider remutualisation as an alternative to selling off the lender or re-floating it on the stock market.
A report prepared for the BSA by the Centre for Mutual and Employee-owned Business at the University of Oxford concludes that there are three main economic arguments for a stronger mutual sector as part of a mixed financial system - diversity, risk appetite and competition.
It argues that a financial system with diverse ownership and governance structures is better able to weather the strains of the business cycle than a plc-dominated one.
The BSA believes building societies can counterbalance the short-termist pressure of the City and tend to adopt a lower risk profile because their primary objective is safety and fair pricing for members rather than profit for shareholders.
It also argues that the government must achieve value for taxpayers and this could be done by returning Northern Rock to mutual status.
John McFall, MP and chairman of the Treasury Select Committee, has thrown his weight behind the report.
He says: "If ever there was a time for an expanded mutual sector it is now. We need to restore faith in the financial services market."
Adrian Coles, director-general of the BSA, says: "Remutualisation would boost competition and create a more diverse market. In doing so it would generate an advantage to taxpayers that outweighs the immediate benefit of capital proceeds."
