A statutory instrument from the Treasury, laid before parliament yesterday, will remove some of the pressure of the International Accountancy Standards from building societies.
As reported in Mortgage Strategy on December 6, building societies with intermediary subsidiaries, such as Britannia with Platform, may have been hit by a requirement of the IAS being introduced on January 1.
This would have limited the amount of securitised assets mutuals could have on their balance sheets.
If they went over this limit they would go beyond their ‘nature limits’ and breach the IAS rules.
Sources told MS that Britannia feared Platform’s securitised assets may have taken the mutual over its limit.
But yesterday’s statutory instrument, hailed as a victory for lobbying by mutuals, removed this ruling.
The statutory instrument states: “From January 1 2005, some building societies will be obliged to prepare their accounts using IAS, and others may choose to do so.
” Under IAS, the accounting treatment of securitised assets will change.
“If the nature limits provisions in the 1986 Act are not amended, the new accounting treatment of securitised assets will affect the way nature limits are calculated.
“This Order is therefore intended to preserve the status quo in terms of the nature limits.”