CML urges Government to help improve building society prospects
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The Council of Mortgage Lenders has urged the Government to tackle capital issues alongside regulatory and funding issues to allow building societies to play their part in restoring the mortgage market.
In a response to a recent Treasury discussion paper, the CML says the Treasury should grasp the opportunity to improve building society prospects.
The consultation considers the actions authorities could take to put their stated support for the mutual sector into practice.
CML director general Michael Coogan says: “Historically, societies have been well capitalised, risk averse and successful competitors to other deposit takers and mortgage lenders as a sector in both the savings and mortgage markets. However, since the funding crisis and credit crunch, and following the failure of a number of firms including a building society, the sector has suffered in the more stressed business environment. The sector’s competitiveness has been significantly undermined by a range of factors, in particular the 300-year low in interest rates.
“We agree with the Treasury’s analysis that building societies as a sector face a number of significant challenges. We believe more needs to be done to ensure the long term contribution of a thriving mutual sector to future competitiveness and growth in the UK retail markets. Reform is needed to ensure the future resilience of the building society model, and we hope the new government will take a wider view on the actions that could help, including taking another look at the regulatory burden on societies and examining funding issues, and not focus exclusively on capital issues.”
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