HM Treasury: UK Government publishes vision for building societies

06 July 2012

The UK Government has published a discussion document setting out its vision for building societies. The consultation sets out how the recommendations of the Independent Commission on Banking will apply to this sector.

Today’s document, which has been welcomed by the sector, confirms the Government’s support for the distinctive alternative offered by building societies. It outlines the Government’s intention to remove unnecessary barriers to growth and help to create a more level playing field with banks. It also confirms that:

• building societies' legislation will be aligned with ring-fencing requirements to ensure clarity and a level playing field;
• the loss-absorbency proposals will apply to building societies in the same way as to banks of a similar profile, and creditor hierarchies for building societies and banks will be equalised; and
• the Government will consider further changes to building societies’ legislation, including relaxing sectoral lending and funding requirements if they are found to unnecessarily constrain institutions in their ability to serve their customers.

Mark Hoban said: "The Government has committed to increasing choice and diversity in financial services. We believe that building societies can play a vital role in this. The proposals we are setting out today provide a real opportunity for societies to expand their services and attract a new generation of consumers.”

Adrian Coles, Director-General of the Building Societies Association, said: "I welcome the Government’s renewed focus on providing the right legislative framework to support a thriving building society sector in the UK. Our sector is diverse and provides services to around 25 million customers, through a model that is very different both in structure and ethos to the plc banks.”

Press release

© HM Treasury