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Hoban rejects FSA’s call to force mutuals to ‘stick to knitting’

Treasury financial secretary Mark Hoban has rejected a call from FSA chairman Lord Turner to reverse the liberalisation of the mutual market.

Turner told the Treasury select committee in November last year that allowing parts of the mutual sector to move into areas beyond their core business of prime real estate lending was the regulator’s “biggest mistake”. He said reversing the liberalisation of the sector which occurred during the 1980s and 1990s is an “unfinished part of our regulatory agenda”.

But speaking at an All Party Parliamentary Group for Building Societies and Financial Mutuals in the House of Commons this morning, Hoban said this was a matter for the Government, not the regulator and that the idea was not under “active consideration”.

He said: “We can look at a number of building societies where that extension of activities has been managed exceptionally well, others where it has been less effective, but that is not a problem that was exclusive to building societies as the financial crisis demonstrated.”

The 104 MPs who are calling for the remutualisation of Northern Rock to be given “equal and due consideration” to other options, will welcome Hoban positioning himself as “neutral” on what to do with the Rock and his comment that the Treasury has no “principle objection” against remutualisation.

However, Hoban added that he did not know how long it will be before UK Financial Investments comes forward with proposals for what to do with Government stakes in Northern Rock and other banks. He said UKFI must give due concern to the return on the taxpayer’s £1.4bn investment in the failed bank and ensure there are no competition concerns resulting from the divestment.

The APPG chair and Conservative MP for Cardiff North Jonathan Evans said the FSA’s appointment of Martin Stewart as head of building societies was a positive move but that a lack of a similar post for mutual insurers meant they were suffering from “benign neglect”.

He said: “We would like to see more Government support for the initiative of the FSA appointing a head of mutual policy because many of those engaged in regulation at the FSA are very much more experienced in the plc sector.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Exasperated Me 11th May 2011 at 2:56 pm

    “many of those engaged in regulation at the FSA are very much more experienced in the plc sector.”

    I think he means bankers, we know what a tangle they are in and they didn’t even have any regulatory knitting to do.

    Lord Turner should find a job which suits his talents, whatever they are.

  2. Agreed, lord turnup should try living in the real world. He is such a buffoon!

  3. So difficult to know what to think about this.

    Hoban rejects it so it must be correct.

    But Lord Turner has called for it so it must be wrong.

    I am spinning in regulatory confusion.

  4. I was under the impression that the FSA was in charge of every commercial decision in the financial industry.Otherwise they would just be a “Financial Industry Regulator”. Then,god forbid,they could only charge the industry accordingly & they would have to live within our financial means.

  5. Julian Stevens 11th May 2011 at 11:10 pm

    I seem to recall Hector Sants having claimed that the FSA is independent of the government. Funny that. Must be like the claim on its website that the FSA is an open and transparent regulator. File under L.

  6. It’s the one thing that Hoban has right so far and yet another thing that Lord Turnip has wrong.

  7. I really despair at times when reading the supposedly informed comments made by some of your readers.

    De-mutualisation was the worst possible thing that happened to the Financial Services Industry in the last 50 years. It certainly exacerbated the financial crisis by exposing the short – termism and inexperience of the so called new “bank managers” especially in the area of market share and sub-prime mortgages.

    Instead of puerile remarks about Lord Turner perhaps a little more thought could be given as to how a once trusted industry can expunge the spectre of customer queues snaking around Northern Rock branches.

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