The chief executive of Hinckley & Rugby Building Society has hit out at the way the Financial Services Compensation Scheme levy is calculated after being forced to make a £357,000 contribution in 2013, its biggest to date.
Chris White argues the building society’s low-risk approach to lending should be taken into account when the FSCS calculates its levy for the year and says it should not be paying for the failure of banks.
The building society’s 2013 contribution is more than double the £175,000 it was forced to pay in 2012, bringing its total contribution to £1.15m in the past five years.
White argues the £1.15m could have been used to take 0.25 per cent of all of its mortgage borrowers for a year, or to boost rates on its savings products by 25 basis points for the same amount of time.
He says: “We support the existence of the FSCS safety net, which gives welcome confidence to savers, but we argue that the share of the burden our customers shoulder is completely out of kilter with the nature of our activities.”
White anticipates the society’s 2014 contribution to be in the region of £350,000.
White adds: “Hinckley & Rugby is paying huge sums whilst representing little of the risk. Our mortgage arrears are £22,000 from a mortgage book of £442m.
“While banks come under fire for the inadequacy of their capital base, we could double the size of our balance sheet and still be compliant with the rules. We are calling on the Government to level the playing field and make the big banks take a bigger, fairer slice of the bill.”