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By Marc Shoffman | Published May 09, 2012

Support the mutual sector: BSA calls on coalition

Speaking at the BSA annual conference in Manchester, Peter Griffiths, chief executive of Principality Building Society, said there were still questions regarding how the coalition will support the mutual sector.

He said: “What lay behind the failure to remutualise Northern Rock? Was the Vickers banking report a failure?”

He warned that there was a danger of consumers being excluded as a result of regulatory changes such as the retail distribution review and mortgage market review, and called on building societies to plug the gap.

He said: “The intended results of these two pieces of regulation are laudable. No one could argue in favour of practices such as coupling abundant money supply with lax credit policy, policies that were prevalent in certain sectors of the mortgage market.

“Unfortunately, the unintended consequences of new regulation could see swathes of the UK population far less able to access financial advice and finding it much harder to get a mortgage. The hoops lenders will have to get consumers to jump through when they apply for a mortgage are getting higher, in fact not just high, but in some instances flaming. A consumer backlash could well follow.”

He insisted that building societies have a bright future. He said: “Many in the sector have indicated that they intend to increase their lending activity this year and the sector is certainly open for business.

“Mutual lenders are primarily funded through low-risk retail deposits and with the general regulatory overload that is now prevalent, hard decisions are having to be made; is that £1 of retail savings better used on increasing liquidity, lending to a first-time buyer or on safer, less capital intensive lending to an established homeowner?

“What is certain is that it can only be used once. The views of the FSA, focused on regulation and prudence and the Government, focused on homes and growth, are at odds here.”

“Despite the potential rocks in the road that we will have to navigate, I am optimistic that the mutual sector has an edge, as banks focus ever more on de-leveraging and short term delivery to shareholders.”

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