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BSA slams FSCS for penalising the prudent

Building Societies Association chairman Graham Beale has slammed the Financial Services Compensation Scheme levy, describing it as being “a moral hazard that must be corrected”.

Speaking at the BSA annual conference today, Beale said that it is disappointing that the FSCS had not been revised for societies as they rely mainly on retail funding.

He says: “We have more retail funding than any other group of institutions in the UK. Then perversely we have to pay disproportionately more for the failure of banks based in Bingley and Iceland. This is a moral hazard that needs to be corrected. It is not right that the prudent pay for the mistakes of the imprudent.”

He adds that the BSA will be keen to play a role in the review of FSCS funding, which the FSA says it is committed to undertake in the next couple of years.

Beale also hit out at the FSA’s stance on capital raising vehicles used by the building society sector, pointing out that the BSA had “strong legal opinion” contradicting the regulator’s position.

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