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FSCS may change levy system to favour building societies

Speculation is mounting over whether the Financial Services Compensation Scheme will change the rules surrounding building societies’ contributions.

Loretta Minghella, chief executive of the FSCS, is one of the main speakers at next month’s Building Societies Association annual conference, a preview of which can be found in this issue starting on page 26.

There is widespread expectation that steps will be taken to help building societies which feel they are paying out millions to rescue failing banks, despite no mutual ever having used the scheme.

This follows news that Nationwide, the country’s biggest building society, estimates its FSCS levy could be as high as £250m.

The society’s results for 2008 will not be out until the end of May and although it expects to make a profit it says the levy will claim a significant chunk of this.

A spokesman for Nationwide says that in common with other mutuals it feels the FSCS levies are disproportionate.

He said: “We knew the levy was coming so we prepared for it but we feel the allocation of these levies is disproportionate and they have an unfair impact on lower risk institutions that are predominantly retail-funded.”

The charge will also include around £13m worth of levies relating to the Derbyshire and Cheshire societies that Nationwide acquired last September.

Ann Cryer, Labour MP for Keighley, has launched a parliamentary early day motion against the fees and has already gained the support of 159 MPs.

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