Mutual model is under threat, warns Tony Ward
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Tony Ward, chief executive of Home Funding, has warned in a speech at today’s Council of Mortgage Lenders’ annual conference, that building societies are under threat from the Financial Services Authority new funding requirements.
He says a lack of government funding and regulatory restraints, means the future of some societies is in danger.
Ward says: “Banks and building societies currently hold circa £280bn of liquidity – mostly cash and Gilts.
“FSA wants this to increase by at least a third to £375bn or more and at the same time – reliance on wholesale funding to be reduced by at least 20%.
“I expect much greater consolidation in the sector. While there are some healthy ones, some societes are in a very vulnerable position.”
And speaking about new lenders coming into the market, Ward told delegates that he does not believe these will make a significant difference that is needed in terms of new lending.
He also believes the FSA is making it a lot harder for new entrants through its liquidity requirements.
He says: “We are going to see new entrants such as the likes of Tesco but they will not be able to rely solely on retail funding and will need to use the same funding methods as the rest of us.”
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Readers' comments (1)
Ian Balfour | 13 Nov 2009 4:21 pm
As always we expect nothing else from Tony, concise, solid, factual and sensible guidance.
We all want stability and an industry built around best customer outcomes. The only way to achieve this is by listening to the experts!
Well I am, is anyone else though?
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