View more on these topics

MPs&#39 report gives victory to mutuals

Building societies are toasting victory in the wake of a Treasury select


committee report which, if implemented, would dramatically increase their


ability to resist carpetbaggers.


The report means Money Marketing&#39s Save our Mutuals campaign has the


backing of the most influential select committee in Parliament. Money


Marketing staff gave evidence to the committee last month.


The committee&#39s “demutualisation report” proposes amending the 1986


Building Societies Act to increase the number of borrowers required to push


through a conversion vote from 50 per cent to 75 per cent, equalising the


position between borrowers and savers but requiring new legislation.


It also proposes changes that do not require legislation which would also


deter carpetbaggers.


The Building Societies Association says the proposals would plug a


legislative loophole and dramatically dec- rease the chances of societies


converting to banks. The select committee wants legislation in the next


Parliamentary session which runs from November 1999 to November 2000.


If the Treasury accepts the report, an amended Building Societies Act


could be in place before Bradford & Bingley holds its formal conversion


vote, which should take place in 2001 on its own estimates.


Mutuals are confident the Government will enforce the recommendations


after Treasury Economic secretary Pat-ricia Hewitt told the committee&#39s


last meeting on the issue she would seriously consider the proposals.


BSA director-general Adrian Coles says: “We are delighted the select


committee has recommended a change to protect the long-term interests of


borrowers which will plug a loophole in the legislation surrounding


conversion votes.”


Yorkshire Building Society chief executive David Anderson says: “I am


delighted the Treasury select committee has restored the checks and


balances in the conversion process.”



Five key recommendations


The number of borrowers required to push through a formal conversion vote


to be increased from 50 per cent to 75 per cent.


Use secondary legislation to increase the number of members required to


propose motions or special resolutions.


Windfall distributions or cash shares should only be available to members


of two years&#39 standing.


Building societies should introduce loyalty incentives to reward members.


Opposes policy of increasing minimum opening balances to deter carpetbaggers.



MUTUAL ADMIRATION


“The report marks the beginning of the end of the carpetbagging


nightmare.” – Save our Building Societies co-ordinator Bob Goodall.


“All the things we have been arguing for are included in the report.


Patricia Hewitt came to our last meeting and we are very hopeful the


Government will seriously consider the recommendations of the report over


the summer.” – Chairman of the All Party Building Societies Group, Andrew


Love, MP.


“It is a very good report with strong recommendations but the Government


has to act on it. It would have been a serious loss to the financial sector


if building societies were allowed to disappear.” – Driving force behind


the inquiry, LibDem committee member Dr Vincent Cable, MP.

Recommended

Clerical Medical posts 53 per cent increase in new business

Clerical Medical&#39s worldwide new retail business leapt 53 per cent in the first six months of 1999 compared to the same period last year.The life office posted new equivalent premium income of £171m smashing its previous record from last year of £112m last year.Total new EPI business for the UK&#39s IFA retail sector also jumped […]

PIA fines IFA over pensions review failings

The PIA has fined Hampshire IFA Capital Plans £15,000 over compliance failings on its pensions review.The IFA based in Portersbridge Street Romsey was also ordered to pay £3,500 towards the PIAs costs.Following a visit by the PIAs Pensions Review Monitoring Unit, it was found that Capital Plans had failed to identify and verify a starting […]

Large mutuals to go within two years

The large mutual insurance company is set to become a thing of the past according to a report by market analysts&#39 Datamonitor.It claims the remaining major mutual life companies, with the exception of Standard Life will all give up their mutual status within the next two years.Datamonitor says this will come about as the mutuals […]

Aberdeen Technology and Income Trust raises £200m

Aberdeen Asset Management has raised £200m for its Technology and Income Trust of which £90m is from bank borrowings.It has two share classes with 55 per cent of the equity issued as ordinary shares yielding an estimated 8.6 per cent. The remaining 45 per cent will take the form of income shares yielding 6.5 per […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment