FSCS branded a moral hazard that must be corrected

The Building Societies Association is continuing to push for reform of the Financial Services Compensation Scheme despite the fact that its year-long campaign has made little progress.

In a speech to delegates at the BSA conference, Graham Beale, who has been chairman of the trade body for the past year, attacked the FSCS as a moral hazard that applied unfair levies to societies to recoup the cost of rescuing failed lenders.

Beale, chief executive of Nationwide Building Society, says: “It is disappointing that we are no further on than we were a year ago in our call for a revision to the FSCS.

“Proportionately we have more retail funding than any other institutions but perversely we have to pay a disproportionate amount for the failure of other lenders.”

He adds: “This moral hazard must be corrected. It’s not right that the prudent should have to pay for the mistakes of the imprudent.”