A parliamentary debate is taking place today looking at whether building societies are having to pay too much of the cost of compensation for Bradford & Bingley and other failed banks.
The Building Societies Association has already warned that hefty levies to the Financial Services Compensation Scheme could cause many societies to fall into the red.
The Westminster Hall debate, to be introduced by Ann Cryer, Labour MP
for Keighley, follows a Parliamentary Early Day Motion that has quickly
gained the support of 159 MPs.
Adrian Coles, director-general of the BSA, says: “Building societies feel very strongly that they are footing a disproportionately high share of the bill for the failed banks.
“Societies have higher levels of retail funding than banks and are not profit maximising, so the levies hit them harder than their plc counterparts. This debate, along with the Early Day Motion Ann has tabled, shows that many MPs feel the same.”
Ann Cryer, Labour MP for Keighley, adds; “It’s hugely unfair that building societies are paying for bank failures. As mutual, member-owned organisations, any additional costs, such as the FSCS levies, ultimately hurt societies’ members – their savers and borrowers.
“My Early Day Motion has gained huge support so far and I hope this
debate persuades the Government that FSCS levies need to be modified to
better reflect the relative risk profiles of building societies and banks.”