Ahead of the Chancellor’s Pre-Budget Report on Wednesday 9 December, the Building Societies Association (BSA) is calling on the Government to take stock of regulatory initiatives and to mitigate unfair competition from public-owned and part public-owned banks and NS&I.
Only then can there be a level playing field within financial services that does not unfairly disadvantage building societies.
Following the launch of its public consultation on the so-called “people’s bank” at the Post Office, the BSA is also calling upon the Government to re-think its plans so that they do not unfairly distort the market in retail financial services and undermine building societies’ valuable contribution.
Commenting, Adrian Coles, Director-General of the BSA, said:
“Building societies are rapidly becoming the only providers of financial services not to be directly subsidised or supported by the state. Banks, NS&I, the Post Office and credit unions all have significant public sector support. The playing field is seriously distorted and we call on the Government to take action so as not to undermine the building society sector. Removing the unlimited Government guarantee on Northern Rock deposits and setting a negative, or at the very least zero, financing target for NS&I in 2010/11 would be steps in the right direction.”
”We also urge the Government to review the various regulatory and other initiatives introduced in response to the banking crisis. Such initiatives are making it increasingly challenging for building societies to conduct meaningful business activity. The Government needs to assess the overall impact of all the changes introduced over the last two years, to ensure that traditional, prudent business models are not undermined. Added pressure on retail margins, together with the increased costs associated with higher capital and liquidity requirements and FSCS contributions has already put profitability under strain.”
The BSA also firmly believes that the Government should be doing more to help savers and the increasing numbers who are facing financial hardship as a result of the recession and the current low interest rates.
Mr Coles stated:
“We want the Government to take further steps to help savers. Allowing the two-way transfer from stocks and shares ISAs to cash ISAs would give savers more flexibility in managing their money.
“With rising unemployment and many households facing added financial pressures we also want to see more effective Government assistance for people who are confronting mortgage payment issues. Support for Mortgage Interest currently excludes many borrowers and a fundamental overhaul is required to open it up to more households facing mortgage problems due to the economic downturn.”
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