The Building Societies Association says the Financial Services Compensation Scheme’s funding model must be reworked so the least risky firms do not pay for the failures of those talking the biggest risks.
Speaking at a fringe event at the Labour party conference in Liverpool this week, BSA chairman Adrian Coles said building societies and cautious lenders have subsidised those that were less cautious in the wake of the financial crisis.
He said: “Politicians and the regulator need to action a fair system of funding for the FSCS that does not penalise those institutions that run themselves in the safest possible manner.
“The contribution to the FSCS is based on how much retail money you take. Those organisations that took loads of retail money, such as societies, paid more into the scheme while those institutions which funded themselves from the wholesale market and indeed put their retail deposits at risk paid least and that is wrong.”