Speaking at this year’s BSA Conference in Yorkshire, chairman John Goodfellow called on the Government to work with banks and building societies in its attempts to ‘run-off’ the rump of the B&B book.
The Government and the FSCS took on a £14bn loan from the Bank of England to cover the B&B intervention. If the sale of the B&B assets does not meet the debt, the next £1.84bn will fall to the banking sector. Goodfellow says it would be “appalling” if this eventuality put the mutual sector at risk.
He said: “We need to ensure that the Government recognises the risk from a shortfall of collections from B&B and Iceland. It would be appalling if building societies were placed at any sort of risk as a result of the failure of the authorities to realise the maximum amount from the B&B loan book.
“The Government should clearly state now what it intends to do when such a shortfall arises. The potential cost to the members of all building societies is significantly larger than the fiasco of MP’s allowances.”
IFAs are also concerned about this issue; if the shortfall exceeds £1.84bn, a further £2.2bn will fall to the general retail pool, which will include IFAs and mortgage brokers.
