View more on these topics

BSA says new Northern Rock will still distort competition

The Building Societies Association has expressed concerns that Northern Rock’s restructure, which will see the bank split in two, still presents a threat to competition.

The European Commission approved Northern Rock’s plans to separate its assets between two companies – Northern Rock plc and Northern Rock (Asset Management) plc – earlier today.

The lender proposed the restructure in response to rules from the EC which state that banks that have received public support should not benefit from an unfair market advantage because of the government money they have received.

But Adrian Coles, director-general of the BSA, says the competitive framework which Northern Rock has to comply with due to its receipt of state aid don’t go far enough.

He says: “Given the split, the 100% government guarantee on Northern Rock’s retail deposits should now be removed.

“Until this happens, we strongly believe that Northern Rock should pay a fee to the government for the benefit of this guarantee.”

Coles argues that Northern Rock’s committment to stay out of the top three best-buys for mortgages is positive, but says he would have preferred this limit to be extended to forcing Northen Rock out of the top five best buy deals instead.

He adds: “We note the restriction to the size of the savings book.

“This is welcome as far as it goes.

“Unfortunately, previous targets set by Northern Rock were met well ahead of planned dates suggesting short-term distortion to the market can take place within a long-term commitment.”

Earlier this month the BSA called for Northern Rock to return to being a mutual lender, as the trade body argued this would encourage competition and would trigger Northern Rock to adopt a more prudent business approach.


Brokers will remain key to distribution

Michael White chief executive Email Mortgages Following the publication of the Mortgage Market Review last week I was interested to read some of the comments about the proposed changes on lenders assessing total affordability. Some argue that if the Financial Services Authority puts sole responsibility for affordability on lenders, they may question what purpose the […]

Mutuality as a means to an endMutuality as a means to an end

By suerrimposing environmental ethics on the building society model Paul Ellis, chief executive of Ecology Building Society, and his team believe they have evolved a template for responsible and sustainable lending

Childcare - thumbnail

Three questions for employers…

The Family and Childcare Trust’s annual survey has been widely reported in the media and the two headline figures were these: the average cost of a nursery place for a child under two has risen by 33 per cent since 2010; and the costs have risen by five per cent in a single year.


News and expert analysis straight to your inbox

Sign up