The Building Societies Association welcomes the Private Members Bill introduced by Julie Elliott MP today.

A small but important piece of legislation means the competitive playing field in banking is not as level as it could or should be.  Under the Building Societies Act 1986, building societies are subject to ‘funding limits’ that their high street banking competitors are not. These limits require at least half of their funding to come from savings deposits made by individuals and businesses. This limits the abilities of societies to lend more to first-time buyers, business owners, and individuals throughout the UK and fetters competition in the banking sector.

Julie Elliott MP has introduced a Private Members Bill which would modernise the Building Societies Act and allow the UK’s building societies to remove certain types of wholesale funding from counting against their funding limits.

The proposed changes to the Act won’t alter the funding limit but will remove several key impediments, enabling building societies to lend more and ensure more mortgage loans are available to UK homebuyers at competitive rates and, crucially, to the lifeblood of housing market: first-time buyers (as well as those further up the housing ladder).

The bill has been subject to significant consultation in recent years and has broad support from across the building societies and mutuals sector, as well as backing from both sides of the House.

Welcoming the introduction of the Building Societies Act 1986 (Amendment) Bill Robin Fieth, Chief Executive of the BSA said:

“I would like to thank Julie Elliott MP for bringing forward this important piece of legislation to help to level the playing field between building societies and banks. Building societies provide a vital service to the communities they serve but are currently prevented from doing more by archaic legislation. The changes proposed in this Bill will help societies to help more people buy a new home and save for the future.”

Ends

Press contact:
Debbie Enever, debbie.enever@bsa.org.uk Tel: 07468 747853

Notes to Editors:

1.    The Building Societies Association (BSA) represents all 42 building societies, as well as 7 of the larger credit unions. Building societies serve around 26 million consumers across the UK and have total assets of over £507 billion. Together with their subsidiaries, they have helped over 3.5 million families and individuals to buy a home with mortgages totalling over £375 billion, representing 23% of total mortgage balances outstanding in the UK. They are also helping over 23 million people build their financial resilience, holding over £370 billion of retail savings, accounting for 19% of all cash savings in the UK.  Within this, societies account for 40% of all cash ISA balances.

2.    With all of their headquarters outside London, building societies employ around 51,500 full and part-time staff.  In addition to digital services they operate through approximately 1,300 branches, holding a 38% share of branches across the UK.