He said the BSA welcomes the FSA reassessing how it regulates the sector but it must strike a balance or risk devolving the mortgage market. He says: “There is a tension between innovation, creativity, safety and risk aversion – as the old saying goes, if you have never failed you have never tried.
“We do not want to go back to a market of 30 years ago with two types of mortgage repayment, only building societies in the mortgage market and a long mortgage queue.”
The BSA has fought hard to try to divert some of the FSCS levies away from building soc- ieties and now says the sector must look forward to avoid any future levy shocks.
Coles says: “The compensation payments to bail out failed institutions in Bingley and Reykjavik is not fair but we are sadly resigned to making the payments over the next three years.
“We would certainly favour the FSA investigating what risk-rel- ated levy premiums would look like. We are also in favour of building up a prepaid fund, we have to be more inventive, we have to have to continue to come up with new ideas rather than just assume the old method of the FSCS funding is just as good as it was two years ago.”
Coles argues the Bank of England has been too extreme in its base rate decisions and thinks a return to 1 or 1.5 per cent would be better for the UK. He says it is now the job of mutuals to get the nation saving again. “We have to remind people of the advantage of saving for the rainy day or even the sunny day and building soc- ieties are the people to do that; people’s perception of building society trust and reliability is huge compared with their perception of banks and we have to retain that.”