Introduction and Background

The Building Societies Association (the BSA) represents mutual lenders and deposit takers in the UK including all 48 UK building societies. Mutual lenders and deposit takers have total assets of over £365 billion and, together with their subsidiaries, hold residential mortgages of almost £235 billion, 19% of the total outstanding in the UK. They hold more than £245 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

The BSA welcomes the opportunity to respond to the consultation by the Department of Business, Innovation and Skills - A Competition Regime for Growth: A Consultation on options for reform (the CP), which is part of the overall exercise reforming the UK’s regulatory arrangements for financial services.

We have responded in detail to the various consultations on regulatory reform so far, including judgment, focus and stability; consultation on reforming the consumer credit regime; building a stronger system; and product intervention –

www.bsa.org.uk/policy/response/hm_treasury_newapproach_fin_reg.htm
www.bsa.org.uk/policy/response/response_hmt_bis.htm
www.bsa.org.uk/policy/response/building_a_stronger_system_response.htm
www.bsa.org.uk/policy/response/DP11_1

We have also responded in full to the recent consultations concerning competition and choice in retail banking –

www.bsa.org.uk/docs/policy/ICB_BSA1.pdf
www.bsa.org.uk/docs/circularpdfs/7145.doc
www.bsa.org.uk/docs/policy/OFT_B2Ebanking.pdf
www.bsa.org.uk/docs/policy/prudentialandfinreg/BIS_HMT_Fin_priv_sector_recovery.pdf

The CP is of less direct relevance to our members, so this response is quite brief.

Comments

The BSA agrees with the CP that “Competition is the lifeblood of a vibrant economy and fundamental to growth”. We support the points set out in paragraph 1.1 and the general objectives included later in chapter 1; namely –

• Improving the robustness of decisions and strengthening the regime
• Supporting the competition authorities in taking forward the right cases;
• Improving speed and predictability for business.

We support, in principle, the Government’s plan to merge competition functions within one body on the basis that a single Competition and Markets Authority to ensure the flexible allocation of scarce public resource to competition issues
as they emerge, and for the combined body to be a stronger advocate for pro-competition policy across Government, including in the delivery of public services.

The proposal is also consistent with the implicit Government objective of ensuring that each regulator should have a properly focused objective.

Our support for the proposal implies no criticism of the existing competition authorities. As the CP makes clear (in paragraphs 1.4-1.5), they are very effective organisations, but – as the CP explains - there is a case for consolidation and rationalisation. We strongly support the important points, set out in paragraph 1.12 to which the Government should have regard, including accountability, transparency, cost etc of the proposed merged authority.

As the BSA stated in its response to Building a Stronger System, while we agree that the new Financial Conduct Authority should have a remit to promote competition, the regulation of anti-competitive behaviour should, in our view, be left to the competition authorities or to any new, merged authority (see paragraph 58 of the CP).