Inquiry into funding is good news for societies

The Building Societies Association has welcomed a government inquiry into funding for the sector because it says mutuals are being shoehorned into a PLC jacket.

The All-Party Parliamentary Group for building societies and financial mutuals revealed last week that it is to hold an inquiry into corporate diversity in financial services.

The inquiry, which will hold its first evidence session today, will look at how the government can develop a policy strategy to reflect its commitment to promote mutuals. It will also examine whether the current legislative framework for mutuals is adequate.

The inquiry follows a report into diversity in the financial services, by the Oxford Centre for Mutual and Employee-Owned Business.

The report argues that little financial support has been made available to the mutual sector, which has had limited access to the Special Liquidity Scheme and credit guarantee scheme, unlike many banks.

Adrian Coles, director of the Building Societies Association, will give evidence at the session and the group will give its recommendations by spring 2011.

A spokeswoman for the BSA says: “We want equal respect for mutuals and PLCs when the government is deciding on issues such as capital requirements. We do not want mutuals shoehorned into a PLC jacket.”

Jonathan Evans, joint chair of the group, says: “Mutuals are an important part of the economy. We are keen to help develop a strategy that promotes corporate diversity.”