Conservative backbencher Sir John Butterfill is to table a private member’s bill in Parliament aimed at improving the competitiveness of building societies and making it easier for mutuals in different sectors to merge.
The bill will be presented in March and calls for changes to rules which require at least half of a society’s funding to come from retail markets. Butterfill says the proposed changes would allow up to 75 per cent of funding to come from other capital markets giving mutuals greater flexibility and increasing their competitiveness, subject to prudential supervision.
The bill also aims to lift restrictions to allow for the merger of mutuals across different sectors, such as life mutuals, building societies and friendly societies.
The other element of the bill puts forward changes to rank depositors and ordinary investors on the same footing in the event of a collapse.
A Treasury consultation closed this week on increasing funding flexibility, such as treating a mutual’s offshore funds as retail rather than wholesale.
Butterfill says: “The aim of the bill is to remove obstacles to the competitiveness of financial mutuals and ensuring that they continue to flourish.”
Building Societies Association director general Adrian Coles says: “The BSA enthusiastically supports Sir John’s objectives which would mean that our members would be even more competitive in the mortgage market.”