View more on these topics

BSA attacks Treasury over Northern Rock restructure

The Building Societies Association says the Treasury’s proposed restructure of Northern Rock could distort competition in the UK mortgage and savings market.

The criticisms were outlined in the BSA’s submission to the European Commission which is investigating the Government’s plans for Northern Rock.

The BSA says the proposed amendments to the state aid for Northern Rock to split the bank into a good bank, BankCo, and a bad bank, AssetCo, will give it an unfair advantage over other building societies.

The BSA says: “The proposed BankCo firm will have a very strong position in the mortgage market, as its initial balance sheet has no or few non-performing loans. BankCo is likely to be able to lend freely, without having to absorb losses from any non-performing loans, unlike all of its competitors in the UK mortgage market, to varying degrees.”

The BSA is asking the EC to impose certain requirements on the restructure in order to overcome competition issues. It says BankCo should be required to pay an annual premium to the Government to cover part of the cost of the protection it has gained from the establishment of AssetCo.

The trade body also wants the Government guarantee covering retail and wholesale deposits to be removed, as this allows BankCo to obtain a lower cost of funding than its competitors.

If these measures are not effective in addressing these issues then BankCo should be required to make a substantial proportion of its new lending in segments of the mortgage market where private sector lenders are not currently lending, such as at high LTV ratios, or specifically to first-time buyers.

The BSA adds: “In areas of the mortgage market where BankCo is competing with a number of private sector lenders its price competitiveness should be limited, possibly by staying out of the Moneyfacts best buy tables for mortgage products.

“Until the explicit guarantee covering retail deposits is removed, Northern Rock should be required to stay out of the top five savings accounts in Moneyfacts best buy tables.”

In a statement this morning, Northern Rock said it would be deferring paying interest on a number of subordinated bonds until further notice. It said it is waiting for approval from the European Commission on its planned restructure and further state aid.


Cover aims to fill pay gap

Salisbury Underwriting Services is offering a new product to help employees safeguard against loss of income if they are made redundant and have to take a lower-paid job.

Principal principles

The appointed representative regime has been in existence well before the advent of the FSA. The governing FSA rules have been amended over time but the basic formulation remains the same – an AR network carries on regulated activities on behalf of an authorised firm in exchange for a share of commission and other remuneration.

Directory lists adviser websites

IFA Life is setting up a directory of advisers’ websites that will allow consumers to search for IFAs by location. Advisers can list their website free.

Cricket - thumbnail

England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. BSA Attacks Treasury
    Having underwritten Mortgages in a past life to, yes,100%, my employer at the that time had the lowest level of arrears of any other Building Society. We maintained a level playing field, and undertook the affordability aspects of the applicant well before the Computer said ‘yes’ or no’! In my personal, and professional, opinion Lenders should be progressing the present climate to allow realistic lending without imposing Terms such as high LTV’s, First Time Buyers, etc, being a reason to avoid granting the Mortgage these clients require!

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm