Several societies have already revealed substantially lower profits for 2008 compared with 2007, partly due to the fees they are having to pay to make up for losses incurred by the failure of Bradford & Bingley, the Icelandic banks and London Scottish Bank.
Skipton revealed pre-tax profits of 22.5m for 2008 – significantly lower than the 163.9m profits it saw in 2007.
It says its profits for 2008 were almost half what they should have been as a result of the 16.3m levy it has to pay to the FSCS.
Britannia was also smacked with a 19.8m levy which forced its profits down to 23.8m in 2008, compared with 114.6m in 2007.
Norwich and Peterborough’s pre-tax profits for 2008 were 5.9m after a 5.5m reduction for its FSCS levy, compared with 24.3m in 2007. And Principality, the parent of secured loans provider Nemo Personal Finance, saw pre-tax profits of just over 9m for 2008, down from the 2007 figure of 30m, after having to pay an FSCS levy of 5.2m.
The BSA is angry about the fees and feels they are disproportionate.
A spokeswoman for the BSA says: “It would not surprise us if some societies report losses this year because of FSCS levies, which are claiming a significant proportion of their profits.
“It angers us that societies are having to pay dearly when they have behaved more prudently than fail-ing institutions.”
She adds: “The fact that these levies will hit societies’ profits is particularly unfair because it will have an impact on members.”
The building society sector has to pay around 200m per year for the next three years – equivalent to 15% of its total pre-tax profits for 2007/08 – despite the fact that no society has yet made a call on the FSCS.
David Cutter, chief executive of Skipton, says: “While I acknowledge the importance of a national safety net for savers and the part this plays in maintaining confidence in the country’s financial stability, it is unjust that the society sector is bearing a disproportionate cost for the troubles of banks which had riskier models.”
A spokeswoman for the FSCS says societies were given the chance last year to opt out of being included in the same deposit class as banks.
She says: “We reviewed our funding system last year and so-cieties were given the opportunity to be placed in a different deposit class from banks.
“No bills have been sent to societies and the figures in our plan and budget report are just estimates at the moment.”